MIGI 12
Auditors
MIGI 12.1
Introduction
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MIGI 12.1.1
See Notes
We require mortgage and insurance intermediaries
to appoint an auditor in certain circumstances. Mortgage and insurance intermediaries
may also be required to appoint an auditor under the Companies Act 1985 ('CA
85') or other statutory provisions.
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MIGI 12.1.2
See Notes
This chapter will help you determine
whether your firm is caught by our requirements or the CA 85 requirements
to appoint an auditor and, if so, what FSA rules consequently apply to your
firm and to your firm's auditor. However, if you are obliged to appoint an
auditor under CA 85 or other statutory provisions you will also need to refer
to the relevant legislation for details of what other non-FSA requirements apply to you.
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MIGI 12.2
FSA and Companies Act 1985 requirements to appoint an auditor
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FSA requirements - mortgage intermediaries
MIGI 12.2.1
See Notes
Firms whose only regulated activities
are mortgage mediation activities are not required to appoint an auditor under
our rules (SUP 3.1) (but see paragraph
12.2.4 below).
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FSA requirements - insurance intermediaries
MIGI 12.2.2
See Notes
Under our rules, firms that carry on
insurance mediation activities, whether or not they also carry on mortgage
mediation activities, are exempt under SUP 3.1 from the requirement
to appoint an auditor if:
(1) they do not hold client money or client title documents (such
as bearer instruments); or
(2) where they hold client money, they hold it under a statutory trust, and the balance of the client money bank account does
not exceed £30,000 at any time during a financial year (see also CASS 5.3).
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MIGI 12.2.3
See Notes
All other insurance intermediaries that
hold client money or client title documents are required to appoint an auditor. The auditor has to provide a report to the firm, for each relevant period, on the firm's
client assets (and this includes its handling of client money) in accordance
with SUP
3.10. There is more information on the rules that apply
to insurance intermediaries when handling client money in Part III, Chapter 2.
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CA 85 requirements - mortgage and insurance intermediaries
MIGI 12.2.4
See Notes
Small insurance and mortgage intermediaries
that are limited companies or limited liability partnerships and are authorised
by us are required to appoint an auditor under the CA 85.
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Other FSA requirements relating to auditors
MIGI 12.2.5
See Notes
A firm that has an auditor (whether appointed
under the CA 85, other statutory provisions or our rules) will need to consider
whether to notify us under Principle 11 (see Part I, Chapter 3) in the following
circumstances:
(1) if the firm expects or knows its auditor will qualify his report
on the audited annual financial statements or add an explanatory paragraph
(SUP
3.7); or
(2) if the firm receives a written communication from its auditors
commenting on internal controls (SUP 3.7).
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Summary table
MIGI 12.2.6
See Notes
The table below summarises when your
firm will be required to appoint an auditor, either under our rules or CA
85, and the Handbook rules which will consequently apply to the firm and the
auditor. The table assumes that your firm does not have to appoint an auditor
for any other reason.
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MIGI 12.2.7
See Notes
Summary of audit requirements:
| AUTHORISED FIRM TYPE | Requirement to appoint auditor under: | FSA auditor rules applicable to: | |||
| Companies Act 1985 | FSA Rules (SUP 3.1) | Firm | Auditor | ||
| Insurance intermediaries | |||||
| Incorporated under CA 85 and: | Para 12.2.3 (above) applies | Yes | Yes | SUP 3.1 - 3.7 | SUP 3.1, SUP 3.2, SUP 3.8, SUP 3.10 |
| Para 12.2.2 (above) applies | Yes | No | SUP 3.1, SUP 3.2, SUP 3.7 | SUP 3.1, SUP 3.2, SUP 3.8 | |
| Not incorporated and: | Para 12.2.3 (above) applies | No | Yes | SUP 3.1 - 3.7 | SUP 3.1, SUP 3.2, SUP 3.8, SUP 3.10 |
| Para 12.2.2 (above) applies | No | No | None | None | |
| Mortgage intermediaries | |||||
| Incorporated under CA 85: | Yes | No | SUP 3.1, SUP 3.2, SUP 3.7 | SUP 3.1, SUP 3.2, SUP 3.8 | |
| Not incorporated (and have no auditor) | No | No | None | None | |
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MIGI 12.2.8
See Notes
The following chapters
of this Guide are also relevant:
| Client money - Part III, Chapter 2 |
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