Related provisions for SUP 3.6.1

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SUP 3.10.2RRP
An auditor of an authorised professional firm need not report under this section in relation to that firm's compliance with the client money rules in the client money chapter9or the debt management client money rules if:64343(1) 6that firm is regulated by:(a) the Law Society (England and Wales); or(b) the Law Society of Scotland; or(c) the Law Society of Northern Ireland; and(2) that firm is subject to the rules of its designated professional body as specified in CASS 7.10.28R
SUP 3.10.3RRP
SUP 3.10.5 R(3) does not apply to an auditor of a lead regulated firm or an incoming EEA firm.
SUP 3.10.4RRP
An auditor of a firm must submit a client assets 5report addressed to the FCA which: 5(1) 5(a) states the matters set out in SUP 3.10.5 R; and55(b) specifies the matters to which SUP 3.10.9 R and SUP 3.10.9A R refer; or (2) if the firm claims not to hold client money or custody assets, states whether anything has come to the auditor's attention that causes him to believe that the firm held client money or custody assets during the period covered by the report.
SUP 3.10.4ARRP
(1) 5For the purpose of SUP 3.10.4 R (1), an auditor must ensure that the report is prepared in accordance with the terms of a reasonable assurance engagement.(2) For the purpose of SUP 3.10.4 R (2), an auditor must ensure that the report is prepared in accordance with the terms of a limited assurance engagement.
SUP 3.10.5RRP

Client assets report

111

Whether in the auditor's opinion

(1)

the firm has maintained systems adequate to enable it to comply with the custody rules (except CASS 6.7)13, the collateral rules,5 the client money rules3 (except CASS 5.2)13, the debt management client money rules9 and the mandate rules5 throughout the period ;5

353

(2)

the firm was in compliance with the custody rules (except CASS 6.7)13, the collateral rules,5 the client money rules3 (except CASS 5.2), the debt management client money rules9 and the mandate rules5,13 at the date as at which the report has been made;

353

(3)

in the case of an investment management firm, personal investment firm, a UCITS firm,2securities and futures firm, firm acting as trustee or depositary of an AIF, firm acting as trustee or depositary of a UCITS7 or IFPRU investment firm8or BIPRU firm8,2 when a subsidiary of the firm is during the period 5a nominee company in whose name custody assets of the firm are registered during the period, 5 that nominee company has maintained throughout the period5 systems for the custody, identification and control of custody assets which:

2285

(a)

were5 adequate; and

5

(b)

included5 reconciliations at appropriate intervals between the records maintained (whether by the firm or the nominee company) and statements or confirmations from custodians or from the person who maintained5 the record of legal entitlement; and

55

(4)

if there has been a secondary pooling event during the period, the firm has 1complied with the rules in943CASS 5.6 and CASS 7A43 (Client money distribution)1and CASS 11.13 (debt management client money distribution rules)9 in relation to that pooling event.

3
SUP 3.10.5ARRP
5In relation to a client assets report provided in accordance with SUP 3.10.4 R, an auditor must ensure that it:(1) is submitted in the form prescribed by SUP 3 Annex 1 R; and(2) is signed on behalf of the audit firm by the individual with primary responsibility for a firm's client assets report and in that individual’s own name.
SUP 3.10.5BGRP
SUP 3.10.4 R provides that an auditor must ensure that a client assets report is prepared in accordance with the terms of, as the case may be, a reasonable assurance engagement or a limited assurance engagement. However, the FCA also expects an auditor to have regard, where relevant, to material published by the Financial Reporting Council 11that deals specifically with the client assets report which the auditor is required to submit to the FCA. In the FCA's view, a client assets
SUP 3.10.5CRRP
(1) An auditor must ensure that the information provided to it by a firm in accordance with SUP 3.11.1 G is included in the client assets report. (2) If by the date at which the report is due for submission in accordance with SUP 3.10.7 R or SUP 3.10.8A R an auditor has not received the information prescribed in SUP 3.11.1 G it must submit the report without that information, together with an explanation for its absence.
SUP 3.10.6RRP
The period covered by a report under SUP 3.10.4 R must end not more than 53 weeks after the period covered by the previous report on such matters, or, if none, after the firm is authorised or becomes subject to SUP 3.11 and its auditor becomes subject to SUP 3.10.55
SUP 3.10.7RRP
An auditor must deliver a client assets 5report under SUP 3.10.4 R to the FCA within four months 5from the 3end of each period covered, unless it is the auditor of a firm falling within category (10) of SUP 3.1.2 R.135
SUP 3.10.8RRP
335(1) 5If an auditor expects that it will fail to comply with SUP 3.10.7 R, it must no later than the end of the four month period in question:(a) notify the FCA that it expects that it will be unable to deliver a client assets report by the end of that period; and(b) ensure that the notification in (a) is accompanied by a full account of the reasons for its expected failure to comply with SUP 3.10.7 R.(2) If an auditor fails to comply with SUP 3.10.7 R, it must promptly:(a)
SUP 3.10.8ARRP
1The auditor of a firm falling within category (10) of SUP 3.1.2 R must deliver a report under SUP 3.10.4 R:(1) to the firm so as to be received within four months of the end of each period covered; and(2) to the FCA upon request within six years of the end of the period covered.
SUP 3.10.8BGRP
1The rights and duties of auditors are set out in SUP 3.8 (Rights and duties of all auditors) and SUP 3.10 (Duties of auditors: notification and report on client assets). SUP 3.8.10 G also refers to the auditor's statutory duty to report certain matters to the FCA imposed by regulations made by the Treasury under sections 342(5) and 343(5) of the Act (information given by auditor or actuary to a regulator). An auditor should bear these rights and duties in mind when carrying out
SUP 3.10.8CGRP
1It is the responsibility of an insurance intermediary's senior management to determine, on a continuing basis, whether the firm is an exempt insurance intermediary for the purposes of this requirement and to appoint an auditor if management determines the firm is no longer exempt. SUP 3.7 (amplified by SUP 15) sets out what a firm should consider when deciding whether it should notify the FCA of matters raised by its auditor.
SUP 3.10.8DRRP
5An auditor must:(1) deliver to a firm a draft of its client assets report such that the firm has an adequate period of time to consider the auditor’s findings and to provide the auditor with comments of the kind to which SUP 3.11.1 G refers; and(2) unless it is the auditor of a firm falling within category (10) of SUP 3.1.2 R, deliver to the firm a copy of the final report at the same time as it delivers that report to the FCA in accordance with SUP 3.10.7 R.
SUP 3.10.9RRP
If the client assets 5report under SUP 3.10.4 R states that one or more of the applicable requirements described in 5SUP 3.10.5 R(1) to (4) has or5 have not been met, the auditor must specify in the report each of 5those requirements and the respects in which it has or 5they have not been met.
SUP 3.10.9ARRP
(1) 5Whether or not an auditor concludes that one or more of the requirements specified in SUP 3.10.5 R (1) to (4) has or have been met, the auditor must ensure that the client assets report identifies each individual rule in respect of which a breach has been identified.(2) 5If an auditor does not identify a breach of any individual rule, it must include a statement to that effect in the client assets report.
SUP 3.10.9BRRP
5For the purpose of SUP 3.10.9 R and SUP 3.10.9A R, an auditor must ensure that the information prescribed under those rules is submitted using, respectively, Part 1 (Auditor’s Opinion) and Part 2 (Breaches Schedule) of SUP 3 Annex 1 R.
SUP 3.10.9CGRP
(1) 5The FCA expects that the list of breaches will include every breach of a rule in CASS insofar as that rule is within the scope of the client assets report and is identified in the course of the auditor’s review of the period covered by the report, whether identified by the auditor or disclosed to it by the firm, or by any third party.(2) 5For the purpose of determining whether to qualify its opinion or express an adverse opinion, the FCA would expect an auditor to exercise
SUP 3.10.10RRP
If an auditor is unable to form an opinion as to whether one or more of the applicable requirements described in SUP 3.10.5 R have been met, the auditor must specify in the report under SUP 3.10.4 R those requirements and the reasons why the auditor has been unable to form an opinion.
SUP 3.10.12RRP
An auditor of a firm must submit a report under SUP 3.10.4 R in accordance with the rules in SUP 16.3.6 R to SUP 16.3.13 R as if those rules applied directly to the auditor.
SUP 3.8.1GRP
The auditor of a firm has various rights and duties to obtain information from the firm and both to enable and to require him to pass information to the appropriate regulator in specified circumstances. This section imposes or gives guidance on those rights and duties.
SUP 3.8.2RRP
An auditor of a firm must cooperate with the appropriate regulator in the discharge of its functions under the Act.
SUP 3.8.3GRP
The appropriate regulator may ask the auditor to attend meetings and to supply it with information about the firm. In complying with SUP 3.8.2 R, the auditor should attend such meetings as the appropriate regulator requests and supply it with any information the appropriate regulator may reasonably request about the firm to enable the appropriate regulator to discharge its functions under the Act.
SUP 3.8.4RRP
An auditor of a firm must give any skilled person appointed by the firm or appointed by the appropriate regulator4 all assistance that person4 reasonably requires (see SUP 5 and section 166(5) of the Act (Reports by skilled persons)).4
SUP 3.8.6RRP
An auditor of a firm must take reasonable steps to satisfy himself that he is free from any conflict of interest in respect of that firm from which bias may reasonably be inferred. He must take appropriate action where this is not the case.
SUP 3.8.8GRP
SUP 3.6.1 R requires a firm to cooperate with its auditor. SUP 3.6.3 G refers to the rights to information which an auditor is granted by the Act. SUP 3.6.4 G refers to similar rights granted by the Companies Act 1985 or where applicable, the Companies Act 2006,2 the Building Societies Act 1986 and the Friendly Societies Act 1992.
SUP 3.8.9GRP
Within the legal constraints that apply, the appropriate regulator may pass on to an auditor any information which it considers relevant to his function. An auditor is bound by the confidentiality provisions set out in Part XXIII of the Act (Public record, disclosure of information and cooperation) in respect of confidential information he receives from the appropriate regulator. An auditor may not pass on such confidential information without lawful authority, for example if
SUP 3.8.10GRP
(1) Auditors are subject to regulations made by the Treasury under sections 342(5) and 343(5) of the Act (Information given by auditor or actuary to a regulator). Section 343 and the regulations also apply to an auditor of an authorised person in his capacity as an auditor of a person who has close links with the authorised person.3(2) These regulations oblige auditors to report certain matters to the appropriate regulator. Sections 342(3) and 343(3) of the Act provide that an
SUP 3.8.11RRP
An auditor must notify the appropriate regulator without delay if he:(1) is removed from office by a firm; or(2) resigns before his term of office expires; or(3) is not re-appointed by a firm.
SUP 3.8.12RRP
If an auditor ceases to be, or is formally notified that he will cease to be, the auditor of a firm, he must notify the appropriate regulator without delay:(1) of any matter connected with his so ceasing which he thinks ought to be drawn to the appropriate regulator's attention; or (2) that there is no such matter.
SUP 3.6.2GRP
In complying with SUP 3.6.1 R, a firm should give a right of access at all times to the firm's accounting and other records, in whatever form they are held, and documents relating to its business. A firm should allow its auditor to copy documents or other material on the premises of the firm and to remove copies or hold them elsewhere, or give him such copies on request.
SUP 3.6.3GRP
Section 341 of the Act (Access to books etc.) provides that an auditor of a firm appointed under SUP 3.3.2 R: (1) has a right of access at all times to the firm's books, accounts and vouchers; and(2) is entitled to require from the firm's officers such information and explanations as he reasonably considers necessary for the performance of his duties as auditor.
SUP 3.6.4GRP
Section 389A of the Companies Act 1985 where applicable, otherwise sections 499 and 500 of the Companies Act 2006,2section 79 of the Building Societies Act 1986 and section 75 of the Friendly Societies Act 1992 give similar rights to auditors of companies, building societies and friendly societies respectively.
SUP 3.6.6GRP
In complying with SUP 3.6.1 R, a firm should take reasonable steps to ensure that each of its appointed representatives or, where applicable, tied agents1 gives the firm's auditor the same rights of access to the books, accounts and vouchers of the appointed representative or tied agent1and entitlement to information and explanations from the appointed representative's or tied agent's1 officers as are given in respect of the firm by section 341 of the Act (see also SUP 12.5.5
SUP 3.6.7GRP
In complying with SUP 3.6.1 R, a firm should take reasonable steps to ensure that each of its suppliers under a material outsourcing arrangement gives the firm's auditor the same rights of access to the books, accounts and vouchers of the firm held by the supplier, and entitlement to information and explanations from the supplier's officers as are given in respect of the firm by section 341 of the Act.
SUP 3.6.8GRP
In complying with SUP 3.6.1 R, a firm should take reasonable steps to ensure that all its employees cooperate with its auditor in the discharge of his duties under this chapter.
SUP 3.6.9GRP
Firms and their officers, managers and controllers are reminded that, under section 346 of the Act (Provision of false or misleading information to auditor or actuary), knowingly or recklessly giving false information to an auditor appointed under SUP 3.3.2 R constitutes an offence in certain circumstances, which could render them liable to prosecution. This applies even when an auditor is also appointed under an obligation in another enactment.
SUP 3.4.1GRP
The appropriate regulator is concerned to ensure that the auditor of a firm has the necessary skill and experience to audit the business of the firm to which he has been appointed. This section sets out the appropriate regulator's rules and guidance aimed at achieving this.
SUP 3.4.2RRP
Before a firm, to which SUP 3.3.2 R applies, appoints an auditor, it must take reasonable steps to ensure that the auditor has the required skill, resources and experience to perform his functions under the regulatory system and that the auditor:(1) is eligible for appointment as an auditor under Part II of the Companies Act 1989 or Part III of the Companies (Northern Ireland) Order 1990 (Eligibility for appointment) where applicable, otherwise Chapters 1, 2 and 6 of Part 42 of
SUP 3.4.4GRP
An auditor which a firm proposes to appoint should have skills, resources and experience commensurate with the nature, scale and complexity of the firm's business and the requirements and standards under the regulatory system to which it is subject. A firm should have regard to whether its proposed auditor has expertise in the relevant requirements and standards (which may involve access to UK expertise) and possesses or has access to appropriate specialist skill, for example
SUP 3.4.5RRP
A firm must not appoint as auditor a person who is disqualified under Part XXII3 of the Act (Auditors and Actuaries3) from acting as an auditor either for that firm or for a relevant class of firm.333
SUP 3.4.6GRP
If it appears to the appropriate regulator3 that an auditor of a firm has failed to comply with a duty imposed on him under the Act, it may have the power to and3 may disqualify him under section 345 or 345A, respectively,3 of the Act.1 A list of persons who are disqualified may be found on the FCA's3 website (www.fca.org.uk).3313333
SUP 3.4.7RRP
A firm must take reasonable steps to ensure that an auditor, which it is planning to appoint or has appointed, provides information to the appropriate regulator about the auditor's qualifications, skills, experience and independence in accordance with the reasonable requests of the appropriate regulator.
SUP 3.4.8GRP
To enable it to assess the ability of an auditor to audit a firm, the appropriate regulator may seek information about the auditor's relevant experience and skill. The appropriate regulator will normally seek information by letter from an auditor who has not previously audited any firm. The firm should instruct the auditor to reply fully to the letter (and should not appoint an auditor who does not reply to the appropriate regulator). The appropriate regulator may also seek further
SUP 3.3.1GRP
This section requires a firm to appoint an auditor and supply the appropriate regulator with information about its auditor. The appropriate regulator requires such information to ensure that the firm has an auditor.
SUP 3.3.2RRP
A firm to which this section applies (see SUP 3.1) must:(1) appoint an auditor;(2) notify the appropriate regulator, without delay, on the form in SUP 15 Ann 34 (Standing data form), in accordance with the instructions on the form, when it is aware that a vacancy in the office of auditor will arise or has arisen, giving the reason for the vacancy;24(3) appoint an auditor to fill any vacancy in the office of auditor which has arisen; (4) ensure that the replacement auditor can
SUP 3.3.3AGRP
6SUP 3.3.2 R applies to every firm to which this section applies. That includes a firm which is under an obligation to appoint an auditor under an enactment other than the Act, such as the Companies Act 1985 or the Companies Act 2006, as appropriate. Such a firm is expected to wish to have a single auditor who is appointed to fulfil both obligations. SUP 3.3.2 R is made under section 137A of the Act (The FCA's general rules), in relation to such firms, and under section 340(1)
SUP 3.3.7RRP
(1) Paragraph (2) applies to a firm which is not under an obligation to appoint an auditor imposed by an enactment other than the Act.(2) If a firm fails to appoint an auditor within 28 days of a vacancy arising, the appropriate regulator may appoint an auditor for it on the following terms:(a) the auditor to be remunerated by the firm on the basis agreed between the auditor and firm or, in the absence of agreement, on a reasonable basis; and(b) the auditor to hold office until
SUP 3.3.9GRP
SUP 3.3.7 R allows but does not require the appropriate regulator to appoint an auditor if the firm has failed to do so within the 28 day period. When it considers whether to use this power, the appropriate regulator will take into account the likely delay until the firm can make an appointment and the urgency of any pending duties of the appointed auditor.
SUP 3.3.10RRP
A firm must comply with and is bound by the terms on which an auditor has been appointed by the appropriate regulator, whether under SUP 3.3.7 R, the Building Societies Act 1986 or the Friendly Societies Act 1992.
SUP 3.1.1RRP
This chapter applies to:(1) every firm within a category listed in column (1) of the table in SUP 3.1.2 R; and(2) the external auditor of such a firm (if appointed under SUP 3.3 or appointed under or as a result of a statutory provision other than in the Act);in accordance with column (2) or (3) of that table, except as described in the remainder of this section.2
SUP 3.1.1AGRP
9For the avoidance of doubt, this chapter does not apply to the following firms if they do not hold client money or client assets and do not appoint an auditor under or as a result of a statutory provision other than in the Act: (1) authorised professional firms;(2) energy market participants, including oil market participants to whom IPRU(INV) 3 does not apply;(3) exempt insurance intermediaries;(4) insurance intermediaries not subject to SUP 3.1.2 R(10);(5) investment management
SUP 3.1.2RRP

Applicable sections (see SUP 3.1.1 R)

This table and the provisions in SUP 3 should be read in conjunction with GEN 2.2.23 R to GEN 2.2.25 G. In particular, the PRA does not apply any of the provisions in SUP 3 in respect of FCA-authorised persons. SUP 3.10 and SUP 3.11 are applied by the FCA only.41

(1) Category of firm

(2) Sections applicable to the firm

(3) Sections applicable to its auditor

(1)

Authorised professional firm which is required by IPRU(INV) 2.1.2R to comply with chapters 3, 519 or 13 of IPRU(INV) and which has an auditor appointed under or as a result of a statutory provision other than in the Act9 (Notes 1 and 6)23

23192323

SUP 3.1 - SUP 3.7, SUP 3.1123

SUP 3.1, SUP 3.2, SUP 3.8,19SUP 3.10

19

(2)

Authorised professional firm not within (1) to which the custody chapter or client money chapter applies22

172223

SUP 3.1 - SUP 3.7, SUP 3.11

SUP 3.1, SUP 3.2, SUP 3.8, SUP 3.10

(3)

Authorised professional firm not within (1) or (2) which has an auditor appointed under or as a result of a statutory provision other than in the Act

SUP 3.1, SUP 3.2, SUP 3.7

SUP 3.1, SUP 3.2, SUP 3.8

(4)

Bank, building society or dormant account fund operator21which in each case carries on designated investment business21(Notes 2A and 6)23

23

SUP 3.1-SUP 3.7, SUP 3.1123

SUP 3.1, SUP 3.2, SUP 3.8, SUP 3.10

(5)

Bank, building society or a dormant account fund operator which in each case does not carry on designated investment business21 (Note 2A)

21

SUP 3.1 - SUP 3.7

SUP 3.1, SUP 3.2, SUP 3.8

(5A)

Credit union

SUP 3.1 - SUP 3.7

SUP 3.1, SUP 3.2, SUP 3.824

27(5B)30

CASS debt management firm unless subject to a requirement imposed under section 55L of the Act stating that it must not hold client money or such a requirement to the same effect30

SUP 3.1

SUP 3.10

SUP 3.11

SUP 3.1

SUP 3.10

(6)

Insurer, the Society of Lloyd's, underwriting agent or members' adviser, UK ISPV11 (Note 5)7

SUP 3.1 - SUP 3.7

SUP 3.1, SUP 3.2, SUP 3.8

(7)

Investment management firm, (other than an exempt CAD firm),16personal investment firm (other than a small personal investment firm or exempt CAD firm) 15,28securities and futures firm (other than an exempt CAD firm or an exempt BIPRU commodities firm20)15 or collective portfolio management firm that is an external AIFM28 which, in each case, has an auditor appointed under or as a result of a statutory provision other than in the Act9(Notes 3 and 623)17

239281723

SUP 3.1 - SUP 3.7, SUP 3.1123

SUP 3.1, SUP 3.2, SUP 3.8,19SUP 3.10

19

9(7A)

Investment management firm (other than an exempt CAD firm)20, personal investment firm (other than a small personal investment firm or exempt CAD firm15),28securities and futures firm (other than an exempt CAD firm15 or an exempt BIPRU commodities firm20) or collective portfolio management firm that is an external AIFM28 not within (7) to which the custody chapter or client money chapter applies22

23281722

SUP 3.1 - SUP 3.7, SUP 3.1123

SUP 3.1, SUP 3.2, SUP 3.8, SUP 3.1025

25(7AA)

A firm that has exercised an opt in to CASS in accordance with CASS 1.4.9 R

SUP 3.1 to SUP 3.7, SUP 3.11

SUP 3.1, SUP 3.2, SUP 3.8, SUP 3.10.

9(7B)

Collective portfolio management firm that is a 28UCITS firm13or an internally managed AIF28 (Note 6)23

13

SUP 3.1 - SUP 3.7, SUP 3.1123

SUP 3.1, SUP 3.2, SUP 3.8,19SUP 3.10

19

13(7C)

UK MiFID investment firm, which has an auditor appointed under or as a result of a statutory provision other than in the Act (Notes 3B and 6)2320

2023

SUP 3.1 - 3.7, SUP 3.1123

SUP 3.1, SUP 3.2, SUP 3.8, SUP 3.1014

17(7D)

Sole trader or partnership that is a UK20MiFID investment firm (other than an exempt CAD firm) (Notes 3C and 6)2320

2023

SUP 3.1 - SUP 3.7, SUP 3.1123

SUP 3.1, SUP 3.2, SUP 3.8, SUP 3.10

(8)

Small personal investment firm or service company which, in either case, has an auditor appointed under or as a result of a statutory provision other than in the Act

SUP 3.1, SUP 3.2, SUP 3.7

SUP 3.1, SUP 3.2, SUP 3.8

(9)8

Home finance provider10 which has an auditor appointed under or as a result of a statutory provision other than in the Act9

10

SUP 3.1 - SUP 3.78

SUP 3.1, SUP 3.2, SUP 3.88

(10)8

Insurance intermediary (other than an exempt insurance intermediary) to which the insurance client money chapter17 (except for CASS 5.2 (Holding money as agent)) applies (see Note 4)8

17

SUP 3.1 - SUP 3.78, SUP 3.1123

SUP 3.1, SUP 3.2, SUP 3.8, SUP 3.108

(11)8

Exempt insurance intermediary and insurance intermediary not subject to SUP 3.1.2 R(10) which has an auditor appointed under or as a result of a statutory provision other than in the Act

SUP 3.1, SUP 3.2, SUP 3.78

SUP 3.1, SUP 3.2, SUP 3.88

(12)8

Home finance intermediary10 or home finance administrator10 which has an auditor appointed under or as a result of a statutory provision other than in the Act.

1010

SUP 3.1, SUP 3.2, SUP 3.78

SUP 3.1, SUP 3.2, SUP 3.88

Note 1 = This chapter applies to an authorised professional firm in row (1) (and its auditor) as if the firm were of the relevant type in the right-hand column of IPRU(INV) 2.1.4R.

Note 2 [deleted]23

171723

Note 2A = For this purpose, designated investment business does not include either or both:

(a) dealing which falls within the exclusion in article 15 of the Regulated Activities Order (Absence of holding out etc) (or agreeing to do so); and

(b) dealing in investments as principal (or agreeing to do so):

(i) by a firm whose permission to deal in investments as principal is subject to a limitation to the effect that the firm, in carrying on this regulated activity, is limited to entering into transactions in a manner which, if the firm was an unauthorised person, would come within article 16 of the Regulated Activities Order (Dealing in contractually based investments); and

(ii) in a manner which comes within that limitation;

having regard to article 4(4) of the Regulated Activities Order (Specified activities: general23).

18

Note 3 = This note applies in relation to an oil market participant to which IPRU(INV) 3 does not apply and in relation to an energy market participant to which IPRU(INV) 3 does not apply. In SUP 3:

(a) only SUP 3.1, SUP 3.2 and SUP 3.7 are applicable to such a firm; and

(b) only SUP 3.1, SUP 3.2 and SUP 3.8 are applicable to its auditor;

and, in each case, only if it has an auditor appointed under or as a result of a statutory provision other than in the Act.

17Note 3A [deleted]23

23

20Note 3B = UK MiFID investment firms include exempt CAD firms. An exempt CAD firm that has opted into MiFID can benefit from the audit exemption for small companies in the Companies Act legislation if it meets the relevant criteria in that legislation and fulfils the conditions of regulation 4C(3) of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007. If a firm does so benefit then SUP 3 will not apply to it. For further details about exempt CAD firms, see PERG 13, Q58.

17Note 3C20 = A sole trader or a partnership that is a UK MiFID investment firm20 to which the custody chapter22 or client money chapter applies2220 must have its annual accounts audited.

20202222

Note 4 = The client money audit requirement in SUP 3.1.2 R(10) therefore applies to all insurance intermediaries except:8

• those which do not hold client money or other client assets in relation to insurance mediation activities; or 8

• those which only hold up to, but not exceeding, £30,000 of client money under a statutory trust arising under CASS 5.3.8

Insurance intermediaries which, in relation to insurance mediation activities, hold no more than that amount of client money only on a statutory trust are exempt insurance intermediaries.8

Note (5) = In row (6):7

(a)7

SUP 3.1 - SUP 3.7 applies to a managing agent in respect of its own business and in respect of the insurance business of each syndicate which it manages; and7

(b)7

SUP 3.1, SUP 3.2 and SUP 3.8 apply to the auditors of a managing agent and the auditors of the insurance business of each syndicate which the managing agent manages.1234567

23Note 6 = Where SUP 3.11 applies to a firm, and SUP 3.10 applies to the auditor of that firm, those sections apply whether or not that firm'spermission prevents it from holding client money or custody assets and whether or not it holds client money or custody assets.A collective portfolio management firm that is an internally managed AIF is required to appoint an auditor under FUND 3.3.6R (2) (Annual report of an AIF) because the AIFM is also an AIF.28
SUP 3.1.2AGRP
8If a firm falls within more than one row in column (1) of the table in SUP 3.1.2 R, SUP 3.1.1 R requires the firm and its external auditor to comply with all the sections referred to in column (2) or (3).41
SUP 3.1.3RRP
This chapter applies17to an incoming EEA firm (and the auditor of such a firm) only if it has a17top-up permission.171717
SUP 3.1.4GRP
The application of SUP 3.10 to the auditor of an incoming EEA firm with a top-up permission is qualified in SUP 3.10.3 R.
SUP 3.1.6GRP
The application of SUP 3.7 to an incoming Treaty firm or an auditor of such a firm is further qualified in SUP 3.7.1 G.1919
SUP 3.1.7GRP
The application of SUP 3.10 to the auditor of a lead regulated firm is qualified in SUP 3.10.3 R.1919
SUP 3.1.9GRP
A firm which is mentioned in SUP 3.1.10 G28 should see the Prudential Standards part of the Handbook13 for further provisions on auditors as set out in SUP 3.1.10 G. 2813281328287281371313131328
SUP 3.2.1GRP
This chapter sets out rules and guidance on the role auditors play in the appropriate regulator's monitoring of firms' compliance with the requirements and standards under the regulatory system. In determining whether a firm satisfies the threshold conditions, the appropriate regulator has regard to whether the firm has appointed auditors with sufficient experience in the areas of business to be conducted by the firm. Auditors act as a source of information for the appropriate
SUP 3.2.2GRP
The Act, together with other legislation such as the Companies Acts 1985, 1989 and 20067, the Building Societies Act 1986 and the Friendly Societies Act 1992, provides the statutory framework for firms' and auditors' obligations. 7
SUP 3.2.5GRP
4It is the responsibility of an insurance intermediary's senior management to determine, on a continuing basis, whether the insurance intermediary is an exempt insurance intermediary and to appoint an auditor if management determines the firm is no longer exempt. SUP 3.7 (amplified by SUP 15) sets out what a firm should consider when deciding whether it should notify the FCA of matters raised by its auditor.6
SUP 3.2.6GRP
4The rights and duties of auditors are set out in SUP 3.8 (Rights and duties of all auditors) and SUP 3.10 (Duties of auditors: notification and report on client assets). SUP 3.8.10 G includes the auditor's statutory duty to report certain matters to the FCA8 imposed by regulations made by the Treasury under sections 342(5) and 343(5) of the Act (information given by auditor or actuary to a regulator8). An auditor should bear these rights and duties in mind when carrying out client
COLL 11.5.1RRP
Where a master UCITS and a feeder UCITS have different auditors, those auditors must enter into an information-sharing agreement in order to ensure the fulfilment of their respective duties, including the arrangements taken to comply with COLL 11.5.3 R and COLL 11.5.4 R (Preparation of the audit report).[Note: article 62(1) first paragraph of the UCITS Directive]
COLL 11.5.2RRP
(1) The information-sharing agreement referred to in COLL 11.5.1 R must include:(a) identification of the documents and categories of information which are to be routinely shared between both auditors;(b) whether the information or documents referred to in (a) are to be provided by one auditor to the other or made available on request;(c) the manner and timing, including any applicable deadlines, of the transmission of information by the auditor of the master UCITS to the auditor
COLL 11.5.4RRP
Where a master UCITS and one or more of its feeder UCITS have different accounting years, the auditor of the master UCITS must make an ad hoc report on the closing date of the accounting year of each feeder UCITS.[Note: article 62(2) first paragraph second sentence of the UCITS Directive]
COLL 11.5.5GRP
Section 351A of the Act provides that where an auditor of an AUT or ACS1 which is a master UCITS or a feeder UCITS, or any person acting on their behalf, makes a disclosure to comply with rules implementing Chapter VIII of the UCITS Directive, that disclosure is not to be taken as a contravention of any duty to which the person making the disclosure is subject. The OEIC Regulations (see regulation 83A) contain corresponding provisions for auditors of ICVCs that are feeder UCITS
COLL 11.5.6RRP
The authorised fund managers of a master UCITS and a feeder UCITS must ensure that the terms on which auditors of their respective schemes are appointed require each auditor to comply with the rules in this section.
SUP 3.11.1GRP
1A firm should ensure that:(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: (a) the circumstances that gave rise to each of the breaches identified in the draft report; and(b) any remedial actions that it has undertaken or plans to undertake to correct those breaches; and(2) the explanation provided in accordance with (1):(a) is submitted to its auditor in a timely fashion
SUP 3.11.4GRP
1SUP 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.
EG 15.2.1RP
1The FCA recognises that the use of its powers to disqualify auditors and actuaries will have serious consequences for the auditors or actuaries concerned and their clients; it will therefore exercise its power to impose a disqualification in a way that is proportionate to the particular breach of duty concerned. The FCA will consider the seriousness of the breach of duty when deciding whether to exercise its power to disqualify and the scope of any disqualification.
EG 15.2.3RP
1In cases where the nature of the breach of duties imposed on the auditors and actuaries under the Act (and/or in the case of actuaries imposed by trust scheme rules or contractual scheme rules) is such that the FCA has concerns about the fitness and propriety of an individual auditor or actuary, the FCA will consider whether it is appropriate to make a prohibition order instead of, or in addition to, disqualifying the individual.
EG 15.2.4RP
1A disqualification order will be made against the person appointed as auditor or actuary of the firm. In the case of actuaries, the disqualification order will be made against the individual appointed by the firm. In the case of auditors, the disqualification order will depend on the terms of the appointment. Where the firm has appointed a named individual as auditor the disqualification will be made against that individual and this will be the case where the individual concerned
EG 15.1.1RP
1Auditors and actuaries fulfil a vital role in the management and conduct of firms, AUTs and ACSs. Provisions of the Act, rules made under the Act and the OEIC Regulations 2000 impose various duties on auditors and actuaries. These duties and the FCA's power to disqualify auditors and actuaries if they breach them assist the FCA in pursuing its statutory objectives. The FCA's power to disqualify auditors in breach of duties imposed by trust
EG 15.1.2RP
1The FCA also has the power under section 345 to impose a financial penalty and a public censure on an auditor or actuary in respect of a failure to comply with a duty imposed on the auditor or actuary by rules made by the FCA, or a failure to comply with a duty imposed under the Act to communicate information to the FCA. The FCA has the power under section 249 to impose a financial penalty and a public censure on an auditor in respect of a failure to comply with a duty imposed
REC 3.7.1RRP
Where the auditors of a UK recognised body cease to act as such, that UK recognised body must immediately give the FCA1notice of that event, and the following information:1(1) whether the appointment of those auditors expired or was terminated;(2) the date on which they ceased to act; and(3) if it terminated, or decided not to renew, their appointment, its reasons for taking that action or decision.
REC 3.7.2RRP
Where a UK recognised body appoints new auditors, that body must immediately give the FCA1notice of that event, and the following information:1(1) the name and business address of those new auditors; and(2) the date of their appointment as auditors.
APER 4.1.3GRP
3Deliberately misleading (or attempting to mislead) by act or omission: (1) a client; or(2) his firm (or its auditors or an actuary appointed by his firm under SUP 4 (Actuaries) 1); or1(3) the FCA or the PRA;falls within APER 4.1.2G.
APER 4.1.4GRP
3Behaviour of the type referred to in APER 4.1.3G includes, but is not limited to, deliberately:(1) falsifying documents;(2) misleading a client about the risks of an investment;(3) misleading a client about the charges or surrender penalties of investment products;(4) misleading a client about the likely performance of investment products by providing inappropriate projections of future investment returns;(5) misleading a client by informing him that products require only a single
APER 4.1.6GRP
3Deliberately failing to inform, without reasonable cause:(1) a customer; or(2) his firm (or its auditors or an actuary appointed by his firm under SUP 4 (Actuaries)1); or1(3) the FCA or the PRA;66of the fact that their understanding of a material issue is incorrect, despite being aware of their misunderstanding, falls within APER 4.1.2G.
COLL 11.3.2RRP
(1) The authorised fund manager of a UCITS scheme that is a feeder UCITS must enter into a master-feeder agreement which, at a minimum, complies with COLL 11 Annex 1 R.(2) Where a master UCITS and a feeder UCITS are managed by the same management company, the master-feeder agreement may be replaced by internal conduct of business rules which, at a minimum, comply with COLL 11 Annex 2 R.(3) The authorised fund manager of a feeder UCITS must not invest in units of the master UCITS
COLL 11.3.7RRP
(1) An authorised fund manager of a feeder UCITS must monitor effectively the activity of the master UCITS.(2) In performing this obligation, the authorised fund manager of the feeder UCITS may rely on information and documents received from the master UCITS, or where applicable, the master UCITS'management company, depositary or auditor, unless there is a reason for doubting their accuracy.[Note: article 65(1) of the UCITS Directive]
COLL 11.3.12RRP
An authorised fund manager of a master UCITS must ensure the timely availability of all information that is required in accordance with its obligations under the regulatory system, the general law and the instrument constituting the fund,2 to:2(1) the feeder UCITS (or where applicable its management company);(2) the competent authority of the feeder UCITS;(3) the depositary of the feeder UCITS; and(4) the auditor of the feeder UCITS.[Note: article 66(3) of the UCITS Directive
COLL 11.1.2RRP

This table belongs to COLL 11.1.1 R

Reference

ICVC

ACD

Any other directors of an ICVC

Authorised fund manager of an AUT or ACS2

2

Depositary of an ICVC, AUT or ACS2

2

11.1.1R

x

x

x

x

x

11.1.3G

x

x

x

x

x

11.2.1G

x

x

x

x

11.2.2R

x

x

x

x

11.3.1R

x

x

x

x

11.3.2R

x

x

x

x

11.3.3G

x

x

x

x

11.3.4G

x

x

x

x

11.3.5R

x

x

x

x

11.3.6R

x

x

x

x

11.3.7R

x

x

x

x

11.3.8R

x

x

x

x

11.3.9R

x

x

x

x

11.3.10G

x

x

x

x

11.3.11R

x

x

x

x

11.3.12R

x

x

x

x

11.3.13R

x

x

x

x

11.3.14G

x

x

x

x

11.4.1R

x

x

x

x

x

11.4.2R

x

11.4.3R

x

11.4.4G

x

11.4.5G

x

11.5.6R

x

x

x

x

11.6.1G

x

x

x

x

x

11.6.2R

x

x

x

x

x

11.6.3R

x

x

x

x

11.6.4R

x

x

x

x

11.6.5R

x

x

x

x

11.6.6R

x

x

x

x

11.6.7R

x

x

x

x

11.6.8G

x

x

x

x

11.6.9R

x

x

x

x

11.6.10R

x

x

x

x

11.6.11G

x

x

x

x

11.6.12R

x

x

x

x

11.6.13R

x

x

x

x

11 Annex 1R

x

x

x

x

11 Annex 2R

x

x

x

x

Note 1: "x" means "applies", but not every paragraph in every provision referred to will necessarily apply.

Note 2:COLL 11.5 (with the exception of COLL 11.5.6 R) applies to auditors.
COLL 11.1.3GRP
(1) This chapter sets out:(a) the notification requirements for a UCITS scheme to be approved as a feeder UCITS under section 283A (Master-feeder structures) of the Act; and(b) the requirements which apply to a feeder UCITS where its master UCITS is wound up, merges with another UCITS or is divided into one or more UCITS.(2) This chapter also ensures there is a flow of information and documents between a feeder UCITS and its master UCITS. In particular, it allows the authorised
SUP 5.5.11GRP
Reasonable assistance in SUP 5.5.9 R should include:(1) access at all reasonable business hours for the skilled person to the firm's accounting and other records in whatever form;(2) providing such information and explanations as the skilled person reasonably considers necessary or desirable for the performance of his duties; and (3) permitting a skilled person to obtain such information directly from the firm's auditor as he reasonably considers necessary or desirable for the
SYSC 13.9.5GRP
In negotiating its contract with a service provider, a firm should have regard to:(1) reporting or notification requirements it may wish to impose on the service provider;(2) whether sufficient access will be available to its internal auditors, external auditors or actuaries (see section 341 of the Act) and to the FCA2 (see SUP 2.3.5 R (Access to premises) and SUP 2.3.7 R (Suppliers under material outsourcing arrangements);(3) information ownership rights, confidentiality
SYSC 13.9.6GRP
In implementing a relationship management framework, and drafting the service level agreement with the service provider, a firm should have regard to:(1) the identification of qualitative and quantitative performance targets to assess the adequacy of service provision, to both the firm and its clients, where appropriate;(2) the evaluation of performance through service delivery reports and periodic self certification or independent review by internal or external auditors; and(3)
APER 4.2.3GRP
3Failing to inform: (1) a customer; or(2) his firm (or its auditors or an actuary appointed by his firm under SUP 4 Actuaries)1);1of material information in circumstances where they were aware, or ought to have been aware, of such information, and of the fact that they should provide it, falls within APER 4.2.2G.
APER 4.2.4GRP
3Behaviour of the type referred to in APER 4.2.3 G includes, but is not limited to:(1) failing to explain the risks of an investment to a customer;(2) failing to disclose to a customer details of the charges or surrender penalties of investment products;(3) mismarking trading positions;(4) providing inaccurate or inadequate information to a firm, its auditors or an actuary appointed by his firm under SUP 4 (Actuaries)1;1(5) failing to disclose dealings where disclosure is required
DTR 8.5.1RRP
A primary information provider must submit to the FCA an annual report prepared by a reporting accountant qualified to act as auditor which states that the primary information provider has satisfied its continuing obligations in DTR 8.4 in the preceding 12 months.
DTR 8.5.2GRP
The annual report provided under DTR 8.5.1 R should state:(1) the opinion of the reporting accountant qualified to act as auditor as to the matters set out in DTR 8.5.1 R; (2) the significant areas tested in reaching that opinion; and(3) a summary of the work undertaken to address these areas and reach that opinion.