Support for ICAEW guidance on third party reporting in financial services
New assurance guidance is issued today by the Institute of Chartered Accountants in England & Wales (ICAEW), produced in conjunction with the National Association of Pension Funds, the Investment Management Association and other service organisations. The guidance, ‘Assurance reports on internal controls of service organisations made available to third parties’ was previously exposed for consultation in July 2005.
Written specifically with financial services organisations in mind, the guidance is voluntary and is designed to help reporting accountants to issue conclusions in their reports on the control procedures of financial service organisations. Activities covered include custody; investment management; pension administration; property management; fund accounting and transfer agency.
The new guidance contains sets of control objectives for the management and protection of customers’ assets, agreed with customers and providers of financial services. It sets out the conditions that the directors of service organisations would expect to satisfy when reporting on the effectiveness of internal controls, thus promoting greater consistency between service organisations in the scope and content of their reports.
Reporting accountants perform their own work to form an opinion on the description, design and operation of internal control procedures as reported by the directors. The guidance also facilitates greater transparency as to the work done by the reporting accountants.
Notes to Editors:
1. The guidance is based on the International Framework for Assurance Engagements and ISAE 3000 Assurance Engagements Other Than Audits or Reviews of Historical Financial Statements, published by the International Auditing and Assurance Standards Board in 2004.
2. This guidance will replace the ICAEW’s guidance AUDIT 4/97 ‘Reports on internal controls of investment custodians made available to third parties.’ The guidance can be found at www.icaew.com/aafac.
3. The working group that developed the guidance was set up after representatives of the National Association of Pension Funds (NAPF), wrote to the Institute of Chartered Accountants in England & Wales (ICAEW) to express members’ concerns about the usefulness of reports prepared under FRAG 21/94. The main concerns were about the wording of the report and the scope of the underlying work performed by the reporting accountants. They considered that the need of customers for information about key controls might not be met under current practice.
4. The Institute of Chartered Accountants in England & Wales is the largest accountancy body in Europe, with more than 128,000 members. Three thousand new members qualify each year. The prestigious qualification offered by the Institute is recognised around the world and allows members to call themselves Chartered Accountants and to use the designatory letters ACA or FCA.
5. The Institute operates under a Royal Charter, working in the public interest. Its primary objectives are to educate and train Chartered Accountants, to maintain high standards for professional conduct among members, to provide services to its members and students, and to advance the theory and practice of accountancy.
Media enquiries:
Sameena Khan, Media Relations Manager, ICAEW, 020 7920 8607 or email sameena.khan@icaew.com