One frustrated broker contacted Mortgage Introducer saying although the FSA has said the full audit is not required, this is being over-ruled by the rules governing accountants.
Tony Annis, mortgage specialist at Middlesex-based Annis Financial Management, explained: “The FSA has confirmed to me on at least two occasions that mortgage firms, certainly limited companies anyway, which do not hold client money do not need to have a full audit in the accountancy sense.
“However, my accountant, who is chartered, confirmed his Institute insists that any client who is authorised by the FSA must have a full audit as this is laid down in the Companies Act 1985.”
He added: “My accountant will not undertake a full audit as this would cost him extra and bring him under further reviews by his Institute. It does not make much sense that the FSA is being over-ruled by an Act introduced so long ago. I now have to find an accountant who is prepared to undertake the audit and the additional expense that this will entail.”
Annis warned that this will have repercussions for brokers when completing the RMAR reports. “In order to include your net profit as part of your capital reserves it must be verified by an accountant but it now seems you would need to have a full half-yearly audit if you wished to include this in the RMAR,” he said.
Bill Warren, director of The Complete Network, said many brokers have not appreciated the implications of this matter and it is up to firms to read and interpret the FSA rules to decipher if they need a full audit.
He said: “If a firm is a limited company it will need to appoint an auditor. But if it does not hold client money, there should be no need for a full audit. If it does, then it will need to seek a full audit from an accountant. The rules are not clear cut and I can understand brokers’ frustrations over this.”
