The Financial Services Authority (FSA) issues today a Consultation Paper (CP) which tackles its suggestions on how auditor reports on client assets can be improved.

In identifying the possible solutions, the Paper first identifies material failings and weaknesses in most auditor reports. The so-called “clean reports” even if the firm has committed significant breaches of client asset rules; covering the wrong chapters of the Client Assets Sourcebook; auditor submitting the report does not understand  the reporting requirements; failure to provide detail on the issues and exceptions identified in the report; late submission of reports; and, “simple errors” in the report, i.e. signature of auditor nowhere to be found, wrong FSA firm reference number supplied or referring to another firm within the body of the report, are just some of the identified problems.

The proposed solutions to the identified problems aim to confirm and clarify the standards required for auditors’ reports on client assets; make consistent and increase the information provided in the report; and, improve firms’ governance oversight of both their auditors and their compliance with the client assets rules.

The consultation period closes on 31 December 2010. The FSA will publish its policy statement on the subject in the first quarter of 2011.

(Source: http://www.fsa.gov.uk/pages/Library/Communication/PR/2010/147.shtml)