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Recent Decisions

SRA to require annual accountants’ reports

SRA’s Decisions

The SRA is consulting on a return to mandatory submission of all accountants’ reports. The proposals include:

  • Mandatory annual declaration that all firms must complete to provide a record of compliance
  • Submission of all accountants’ reports (both qualified and unqualified) to provide improved data for the regulator
  • Direct submission by accountants – reporting accountants must submit reports directly to the SRA
  • Fixed financial penalties for firms that submit late or provide incomplete declarations
  • COLP/COFA restrictions – firms with turnover exceeding £600,000 cannot have unilateral decision-makers occupying both key compliance roles (applies to approximately 3,525 firms, nearly 40% of the total)

Additional proposals on “more timely” information requirements for firms significantly changing their profile through mergers, acquisitions or sales will be published next year.

Industry Response

A recent SRA spot-check revealed concerning levels of non-compliance:

  • Of 596 firms surveyed, 25 non-exempt firms had not obtained an accountant’s report for their last reporting period
  • A further 31 firms obtained their report after the six-month deadline

The regulator has also observed a recent increase in large firm failures and identified harms arising from firms “growing beyond their competence, capacity or capability.”

Key Factors

  • 2014 rule change: Since 2014, firms have only been required to submit qualified reports to the regulator, creating oversight gaps
  • Client money risk: The SRA states that “information provided in accountants’ reports can help to identify firms that are placing client money at risk”
  • High-risk firms: The 3,525 larger firms affected by the COLP/COFA restrictions represented high client money balances and accounted for the highest-value claims to the compensation fund
  • Enhanced oversight goal: The proposals are “designed to enhance oversight without placing unnecessary burden on firms”
  • Concentration of power risks: Recent failures highlighted dangers when a single individual holds significant power alongside compliance roles

Read the full article here.

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SRA to require annual accountants’ reports

SRA’s Decisions The SRA is consulting on a return to mandatory submission of all accountants’ reports. The proposals include: Additional proposals on “more timely” information requirements for firms significantly changing their profile through mergers, acquisitions or sales will be published next year. Industry Response A recent SRA spot-check revealed

SRA Warning: Expect Enforcement Action for Lack of Mazur Response

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