CASS Audit Preparation for Firms that are Newly Authorised or Waiting for their Permissions
Introduced in July 2018, the temporary permissions regime (TPR) enabled relevant EEA firms that were passporting into the UK when the transition period ended to continue operating temporarily in the UK. In 2021, the FCA started accepting applications for the Part IV Permission so that the firms can become fully authorised.
Later, in 2021 the FCA issued a reminder to firms under the TPR that CASS 14 rules should be followed and requested them to certify that applicable obligations are clear and are followed.
Under CASS 14, firms must periodically report to the regulator by submitting the “Temporary Permission Client Asset Return” (TPCAR). The regularity of the reporting depends on the firm’s regulated assets and can be done either quarterly or annually. In terms of the annual Client Assets audit report – the firms under TPR do not require to have a UK audit on their CASS arrangements, unless the firm is a UK subsidiary.
Backlog at the FCA
Now that the temporary permissions regime (TPR) is in force, firms have started receiving formal directions confirming their ‘landing slot’ to apply for full (non-temporary) Part 4A permission or to vary their existing Part 4A permission if the firm already has a UK top-up permission.
The backlog of the application submitted is quite substantial and a number of firms are still operating under the TPR.
Firms under TPR are not required to undertake an annual CASS external audit however, as soon as the full authorisation is granted – firms with the permissions to hold client money or/and custody assets will need their auditor to submit a CASS audit opinion to the regulator at the end of the next financial year end (period end).
Preparation for audit
The first audit of client money/assets is seen by many firms as a costly and time-consuming intervention that normally reveals a number of issues and gaps in the firm’s processes. We, suggest that a review by the independent consultant is essential preparation for a successful first external CASS audit. It is far better to self – identify issues than to have them identified by an external auditor.
How can we help
At Protiviti, we have a track record of helping firms with their obligation on CASS. We can help you by ensuring that:
- You are aware and can explain your business to your auditor and flag how and why CASS does (or doesn’t) affect your business
- Your risk and control framework is completed and fit for purpose
- Your firm has a right level of CASS knowledge and experience
- Your CASS “footprint” is clear and identifies all the areas where client assets arise
- Any gaps identified as a result of our review are followed up
We perform a full CASS health-check to ensure your controls mitigate risks and enable you to be CASS- audit ready.
We have a well-established team of the CASS SMEs with the 1st, 2nd and 3rd lines of defence experience and proven record on engagements of this type.