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One of the greatest control challenges in the Financial Service industry today stems from a lack of a proper operational accounting records. Operational and administration systems may do their core job well, but often they fail to create operational accounting records to correctly account for that activity and the positions and exposures that it can generate.
Where a company is authorised to hold client money – money which still belongs to the client and not to the firm – the accounting challenge is much greater, and even if the client has operational accounting records these may be inadequate for delivering full control of client cash.
This can lead to a firm breaching Client Asset (CASS) regulations and a qualified audit report sent by their auditor to the Financial Conduct Authority (FCA). The FCA’s Senior Managers and Certification Regime (SM&CR) threatens career-ending consequences for failure to comply with the spirit and letter of these regulations.
Further, the CASS audit regime – implemented by the Financial Reporting Council (FRC) – means any non-compliance by a firm is much more likely to be detected and reported to the FCA. The net effect leaves the Significant Management Function (SMF) and the Operational CASS Oversight Function (CASSOF) with nowhere to hide from their CASS challenges.
Our new free-to-download Whitepaper – Accounting for CASS 7: How to meet the Operational Accounting Challenges for Client Asset Protection – explains how the functionality of a CASS Accounting Hub can help a firm achieve the real-time client money accounting requirements needed for CASS 7.