At Millet Accountants, we are often asked by firms regulated by the Financial Conduct Authority (FCA) about their obligations when it comes to CASS audits. The Client Assets Sourcebook, commonly known as CASS, is an important part of the FCA Handbook and sets out the rules for firms that hold or control client money and assets. These rules exist to protect clients and ensure that their funds are handled responsibly. However, understanding exactly when a CASS audit is required can be confusing, especially for firms that are new to FCA regulation or have recently changed the way they handle client money. In this article, we explain when a CASS audit is necessary, why it matters, and how Millet Accountants can support your business in meeting its regulatory obligations.
Understanding What a CASS Audit Involves
A CASS audit is an independent examination of a firm’s compliance with the FCA’s client asset rules. The purpose of the audit is to confirm whether a firm is following the required procedures for safeguarding client money and assets. It is not just a box-ticking exercise, but a detailed review of a firm’s systems, controls and record-keeping.
During a CASS audit, the auditor will look at how client money is segregated, reconciled and protected, as well as how the firm ensures that assets are not co-mingled with company funds. The audit will typically result in a report that is submitted to the FCA, setting out whether the firm has complied with CASS rules and identifying any areas of concern.
At Millet Accountants, we provide CASS audits for a wide range of firms, including investment firms, brokers and other businesses that hold client money. We work closely with our clients to ensure that they fully understand the process and are prepared for the audit, reducing the risk of issues being identified by the regulator.
When Is a CASS Audit Required for FCA Regulated Firms?
A CASS audit is required when a firm holds or controls client money or assets, as defined by the FCA. If your firm falls into this category, you must have an annual CASS audit carried out by a qualified auditor. This applies to both small and large firms, and the obligation is not dependent on the size of the client balances you hold.
The audit must cover the firm’s compliance with all relevant CASS rules that apply to its business. Even if you hold client money only occasionally or for short periods, you may still be required to have a CASS audit. The FCA takes a risk-based approach, meaning that any firm that has the ability to handle client money or assets is subject to close scrutiny.
At Millet Accountants, we help firms determine whether they fall within the scope of the CASS audit requirement. We assess how your business operates, the types of transactions you undertake and whether client money or assets are handled at any stage. Where an audit is required, we provide clear advice on preparing for it and ensuring that your systems are compliant well before the audit takes place.
The Importance of Regular Compliance Reviews
While a CASS audit is typically carried out annually, compliance with the client asset rules is an ongoing responsibility. Many firms make the mistake of focusing only on the audit period itself, rather than maintaining strong processes throughout the year. This can create unnecessary risks and increase the likelihood of issues being flagged during the audit.
At Millet Accountants, we recommend that firms carry out regular internal reviews of their client asset processes. By identifying potential weaknesses early, you can resolve issues before they become serious problems. This proactive approach not only makes the audit process smoother but also demonstrates to the FCA that your firm takes compliance seriously.
We also provide advisory services alongside statutory audits for businesses that require both. This integrated approach means we can support your firm in meeting all its regulatory and financial reporting obligations, saving time and reducing duplication. By working with us, you will always have a clear understanding of where you stand in terms of compliance and what steps you need to take to remain fully aligned with FCA expectations.
What Happens If a CASS Audit Identifies Issues?
If a CASS audit finds that your firm has not complied with the FCA’s client asset rules, the auditor will detail these issues in the report submitted to the regulator. Depending on the severity of the findings, the FCA may take action ranging from requiring remedial measures to imposing penalties or even restricting your permissions.
This is why preparation and strong systems are essential. At Millet Accountants, we work with firms to help prevent issues from arising in the first place. If we identify potential weaknesses in your processes, we provide practical advice on how to address them before the audit is carried out. This reduces the likelihood of any negative findings being reported to the FCA.
We believe that a good CASS audit is not just about passing a compliance check but about improving your firm’s controls, governance and overall reputation. By maintaining strong compliance systems, you can build trust with clients and stakeholders while reducing regulatory risk.
How Millet Accountants Can Help Your Firm
As a London-based accountancy firm with experience in both CASS assurance and statutory audits, Millet Accountants is ideally placed to support FCA-regulated firms. We understand that the rules around client assets can seem complex, particularly for firms that are growing or expanding into new areas.
We provide a personalised service, taking the time to understand how your firm operates and tailoring our advice to your specific circumstances. Our team ensures that you know exactly when a CASS audit is required and helps you prepare thoroughly for it. We also stay up to date with the latest regulatory changes, so you can be confident that you are receiving the most current and relevant advice.
Working with us means more than simply meeting your regulatory obligations. It means building a stronger, more resilient business that is well-prepared for growth and regulatory scrutiny. By choosing Millet Accountants, you will have a partner who understands the demands of FCA compliance and who is committed to helping your firm succeed.
Final Thoughts
Knowing when a CASS audit is required is essential for any FCA-regulated firm. If you hold or control client money or assets, you will almost certainly need an annual CASS audit. However, the audit should not be seen as a one-off obligation. Compliance with the FCA’s client asset rules is a continuous process that requires regular monitoring, robust systems and a commitment to good governance.
At Millet Accountants, we provide the expertise and support that firms need to meet these obligations with confidence. From carrying out CASS audits to providing ongoing advisory services and statutory audits, we are here to help your firm stay compliant, protect your clients and maintain a strong reputation in London’s competitive financial sector.
If you are unsure about whether your firm needs a CASS audit or would like to discuss how we can support you, please get in touch with us today. We would be delighted to offer our advice and help you navigate the complexities of FCA compliance with ease.