FCA CASS Assurance Standard: Are you ready?

  • By Jeremy Williams
  • 23/01/2017

We're now comfortably into 2017, and if you are involved in client asset (CASS) audits for FCA firms such as insurance brokers, asset managers and stockbrokers, you need to prepare for changes to the way in which you conduct these assurance engagements. New rules for CASS audits come into force by the beginning of May 2017.

The reason for the changes is the introduction of the FRC's new Assurance Standard for CASS audits. The Standard replaces the FRC's earlier guidance on CASS audits found in APB Bulletin 2011/2 and FRC Bulletin 3. It has equivalent scope and authority to the FRC's auditing standards, and represents a more demanding and rigorous regime for CASS auditors to follow, including:

  • a requirement for CASS auditors to comply with FRC Ethical Standards;
  • the application of engagement quality control review (EQCR) to all reasonable assurance engagements;
  • more emphasis on the need for training and experience within CASS audit teams; and
  • a new focus on control confirmation and testing, including the use of walk-throughs.

The Standard applies to all CASS audits for reporting periods beginning on or after 1 January 2016 (and is early-adoptable). Now, the FCA's Handbook rules (SUP 3.10.6) limit such reporting periods to a maximum of 53 weeks, so the Standard will definitely apply to all reporting periods ending on or after 7 January 2017. And since auditors have a maximum of four months from the period end in which to submit their CASS report to either the FCA or, in the case of insurance brokers, to the firm itself (see SUP 3.10.7 and 3.10.8A), CASS audit teams don't have long to get to grips with the new Standard.

Using Mercia's revised FCA manuals

Mercia's two specialist assignment manuals cover CASS audits - the FCA(DIF) and FCA(MGI) manuals. Both were updated in November 2016 to comply with the new Standard but also continue to cover CASS audits conducted under the old Bulletin regime until this expires at the beginning of May 2017. The revised manuals contain significant changes to the documentation, so CASS auditors would be well advised to become familiar with the new approach before time runs out!

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