How to prepare for a successful CASS audit

CASS – risks and controls

Risk and control frameworks and CASS footprints are a crucial way for the auditor to understand how client assets arise and are treated in your business. By giving your auditor clear and useful information you can reduce the time, effort and, (hopefully), the cost of your audit.

It is important that you understand the FCA Handbook and how it applies to you. Make sure you can explain your business to your auditor and flag how and why CASS does, or doesn’t, impact your business. Whilst the auditor should be familiar with the sector and have worked with similar firms before, every firm is different.

Auditors expect a compliance manual to be in place, and to be able to see a line-by-line analysis of how the CASS rules apply to a firm, with risks and controls clearly mapped to the Handbook.

Make sure your risk and control framework is a living and breathing document and that your biggest risks aren’t overlooked. Make sure you’re considering the right risks and therefore adding value to your operations.

Make good use of compliance monitoring to help identify any CASS issues. Ideally, you should never hear about a breach during your CASS audit that you haven’t already identified internally. Auditors will be looking at the controls and processes for recording, resolving and reporting breaches and errors.

CASS – internal records

Many firms experience difficulties with internal record keeping, largely because of polluted external data fees or, in the case of outsourced functions or services, it is unclear who is the owner of the records. In a sector making increased use of third party providers, auditors will continue to review the oversight of outsourced functions, checking that firms have a good understanding of the processes in place and the ownership of responsibilities.

Communication with your auditors

Regular, clear communication with your auditors will help the process to run smoothly – ahead of, and during, the fieldwork but also year-round.

Before the audit process has even begun there are a number of things you can do to ensure you are well positioned. Firstly, hire auditors with the right level of CASS knowledge and experience for your firm. This will help make the audit process as painless as possible.

Ask for the deliverables list in advance of the audit. This will detail much of the initial documentation that the auditor requires for the audit, which could take a long time to compile, which could then be incorporated into your year-end processes to avoid duplicate workflows. This will ensure you have everything to hand when required. Once you have the list from the auditor, check that you understand what has been requested, or seek clarification on anything y#ou don’t prior to the start of the audit. Discussing ahead of schedule could help you identify more efficient processes.

Requests for additional information will naturally come during the fieldwork; not being able to respond promptly will inevitably prolong the process. Appoint key audit contacts to facilitate the process for requests, queries and resolving outstanding actions. Set aside plenty of time for the audit, ensure that all of your key staff are available when required and that they haven’t booked time off during the audit or have a busy schedule at the time of the fieldwork.

Finally, address potential complications throughout the year, as and when they occur. Give your auditor or compliance team a call and provide them with the information they need to assist you. This way you avoid having to backtrack through months of documentation at the time of the audit.

These simple recommendations, none of which should be particularly time consuming, will ensure you have a good understanding of how the CASS rules apply to your business. This knowledge, combined with a proactive approach and effective communication with your auditor, will contribute to a successful CASS audit process.