Take Steps to Improve Client Assets Report: FSA

Sarah Woodman, Global events journalist
September 27, 2010 /

The FSA (Financial Services Authority) will be taking steps for improving the quality and consistency of auditor’s reports regarding assets. The FSA has decided to do this after a number of serious failings came to its notice.

A review by FSA has identified that auditors were deficient in applying the proper regulator’s requirements while doing client’s assets reports.

Weaknesses that have been highlighted by the review include that many auditors were prone to submit “clean” reports of clients who have been found guilty of committing significant breaches of the client assets rule. Also, auditor’s reports have also been found to cover wrong chapters from the Client Assets Sourcebook (CASS).

Other instances reported by the review include cases where auditors were found to have not provided the client asset report as they were not aware of it or did not understand it. Also sometimes auditors did not provide adequate details on the exceptions and issues that have been identified in their report.

Some auditors were found to have “simple errors” in the client assets report. For instance, quoting the wrong FSA firm reference number, forgetting to date or sign reports that have been submitted and referring to the name of another client in the body of the report that was of a certain client.

In response, the FSA has come out with a consultation paper which has set out 10 proposals which are aimed at driving improvements on the consistency and quality of the auditor’s reports on client assets. These proposals will apply to all firms and their external auditors.

The consultation paper has been made available on FSA’s official website. The consultation period closes on December 31, 2010. A policy statement can be expected to be published by the FSA in the first quarter of 2011.


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