A key responsibility of directors and senior management in a financial services business is ensuring the business complies with the Financial Services and Market Act 2000 and the Financial Conduct Authority (FCA) Handbook rules.

Under the Companies Act 2006, businesses do not normally need an audit if they meet two of the three size limit exemptions, however many businesses who are FCA regulated are not able to apply these exemptions.

From our own experience, for FCA regulated businesses, we are seeing an increase in instances of directors failing to fully understand their obligations and therefore not undertaking an external audit for either their annual financial statements or capital resources calculation. 

Who is affected?

If you are a BIPRU* investment firm, insurance intermediary or investment management firm providing any services to clients linked to ‘financial instruments’ (shares, bonds, units in collective investment schemes and derivatives) then the chances are you will need either an external audit or independent assurance over the accuracy of your firm’s retained earnings, even if no Companies Act audit is required. 

This is a complex area and the expert team at Johnston Carmichael are on hand to help review your situation and permissions to ascertain what is required. Our team of financial services experts can guide you through the process to make sure you are meeting your responsibilities.

Got a question?

For more information or to arrange an informal chat to discuss your business get in touch with a member of our Audit & Assurance or Financial Services teams.

*A firm that falls within the scope of the regulators prudential sourcebook for Banks, Building Society’s and Investment firms