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Does my FCA-regulated firm need an audit?

The FCA rules do not dictate whether the firms that they regulate need statutory audits of their accounts – the rules are set out in company law. 

 

About the author

Katherine White

+44 (0)20 7556 1374
whitek@buzzacott.co.uk

Small entity audit exemption

UK company law allows some FCA-regulated entities that are members of small groups to take advantage of statutory audit exemption, however some FCA-regulated entities are not eligible for this exemption.

To qualify as small, the whole worldwide group must meet two out of the three following criteria for two years in a row:

Turnover/revenue

<£10.2m (net)

<£12.2m (gross)

Total assets

<£5.1m (net)

<£6.1m (gross)

Average number of employees

Not more than 50

Not more than 50

 

If the group is small, what else applies to FCA-regulated entities?

Entities in some small groups are not allowed to take advantage of this audit exemption. This includes groups where any entity is: 

  • a MiFID investment firm (including BIPRU and IFPRU firms, and some Exempt-CAD firms);
  • a UCITS management company;
  • authorised under the Banking Consolidation Directive or the Insurance Directives;
  • an e-money issuer; or
  • listed in an EEA state such as listed on the London Stock Exchange.

Which Exempt-CAD firms do not need an audit?

An Exempt CAD firm that has opted into MiFID can be audit exempt if it is in a small group and fulfils the conditions of regulation 4C (3) of the FSMA 2000 (Markets in Financial Instruments Regulations) 2007, per section 474 of the Companies Act 2006. If you would like more information on whether or not your firm qualifies, please get in touch using the form below.

What do I need to do if my FCA-regulated firm is not exempt from audit?

The company’s directors, or LLP’s designated members, must appoint a UK statutory auditor. The auditor will report on whether or not the accounts are “true and fair”. This report will be included with the accounts when they are submitted to the FCA and sent to shareholders, Companies House (for filing on public record) and HMRC (with the tax return).

The firm may also be required to get a Client Asset (“CASS”) audit, even if the firm does not have permission to hold client money. Buzzacott’s specialist financial services audit team can guide you through the requirements for audit and CASS audit.

Get in touch

Please get in touch if you want to discuss the statutory and CASS audit requirements or availability of audit exemption for your FCA-regulated firm.

 

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