SUP 3.11 Review of auditor’s client assets report

A firm should ensure that:

1. (1)

   it considers the draft client assets report provided to the firm by its auditor in accordance with SUP 3.10.8DR (1) in order to provide an explanation of:

   1. (a)

      the circumstances that gave rise to each of the breaches identified in the draft report; and

   2. (b)

      any remedial actions that it has undertaken or plans to undertake to correct those breaches; and

2. (2)

   the explanation provided in accordance with (1):

   1. (a)

      is submitted to its auditor in a timely fashion and in any event before the auditor is required to deliver a report to the FCA in accordance with SUP 3.10.7 R or to the firm in accordance with SUP 3.10.8A R as the case may be; and

   2. (b)

      is recorded in the relevant field in the draft report submitted to it by its auditor.

The FCA expects a firm to use the client assets report as a tool to evaluate the effectiveness of the systems that it has in place for the purpose of complying with requirements to which SUP 3.10.5 R refers. Accordingly, a firm should ensure that the report is integrated into its risk management framework and decision-making.

SUP 3.4.2 R provides that a firm must take reasonable steps to ensure that its auditor has the required skill, resources and experience to perform its functions. The FCA expects a firm to keep under review the adequacy of the skill, resources and experience of its auditor and should critically assess the content of the client assets report as part of that ongoing review.