In a move which highlights the important role played by audit firms, the FCA has fined firm Macintyre Hudson LLP (MHA) for failings in respect of their client asset reports. The final notice published yesterday, highlights issues identified across four separate client asset reports affecting two separate firms.
This notice is also an important reminder to regulated firms to ensure they agree with the contents of the client asset report.
Within the client asset report, the auditor must include a schedule of breaches that were open during the audit period. This includes breaches identified and recorded by the regulated firm, and also breaches identified by the auditor during the audit process.
As detailed in the notice, MHA failed to report breaches which they had identified and were aware of, and also failed to identify breaches and therefore also failed to report those.
The FCA relies on the work of auditors to provide a vital insight into the business of the firms they regulate. In an earlier blog, we discuss the challenges presented by CASS audits and how firms can best prepare for them.
Regulated firms must also provide their response to the breaches that are recorded on the breach schedule. It is therefore critical for firms to take an active role in the final agreement over the contents of the report prior to submission to the regulator.