ICAEW launches ‘operational effectiveness’ guidance

The ICAEW has issued proposed guidance designed to help accountants issue
opinions in their reports on the control procedures of ‘financial service
organisations’ such as investment fund managers and traders.

The exposure draft for third party reporting is the first guidance of its
kind according to the institute and is written specifically for financial
management organisations, users and their auditors.

Martin Jones, chair of the working party at the ICAEW, said: ‘Users are
increasingly seeking more positive assurance on both the design and operating
effectiveness of service organisations’ control procedures.

‘The exposure draft is an example of the institute working with an investor
organisation to help close an expectation gap in an area which has been causing
investors some concern.’

The proposed guidance sets out the conditions that service organisations
should meet in providing information on internal controls and control
procedures. This includes greater consistency between service organisations on
the scope and contents of reports and greater transparency in the extent of
testing undertaken by reporting accountants. Other measures include the
provision of a conclusion for reporting accountants to provide their opinion on
whether a service organisation has met the criteria for giving information on
internal controls and control procedures and a best practice model.

The guidance was produced in conjunction with the National Association of
Pension Funds, the Investment Management Association and others and includes
topics such as investment management, pension administration, property
management and fund accounting.

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