The Financial Reporting Council (FRC) has launched a consultation proposing limited revisions to the Client Assets Assurance Standard (CASS), which provides requirements and guidance for auditors who are have to report to the Financial Conduct Authority on an entity’s compliance with the CASS Rules
The standard was issued in 2015, and the revisions follow a post implementation review. Those who responded to the consultation, or attended a round table agreed that the standard had increased the quality of audit in the sector, as well as the preparedness of CASS entities for audit. The safe control and custodianship of client assets is an important area of public interest.
The proposed changes are of limited scope, and focus mainly on updates to reflect: regulatory changes to the scope of the CASS regime; changes to improve the value of reporting to those charged with governance; and some streamlining to requirements. The FCA has been consulted on the revisions, and both the FRC and FCA agree that the current priority remains to fully embed the standard. Although the quality of CASS audit has improved, the audit market is a diverse one, and further progress is needed.
The revisions add more detail to the clause on inherent risk and control risk clarifying that in addition to the current requirement that the CASS auditor obtain an understanding of the firm’s organisational structure and operating environment, the revised version stresses the ‘use of information technology to support the application of the CASS rules’, and ‘use of or reliance on third-parties’.
The consultation was released on the same day as the FRC slapped a multimillion fine for KPMG over failures in compliance with CASS rules for BNY Mellon banking group dating back to 2011.
The consultation closes on 27 September 2019.
Sara White | 01-08-2019