ICAEW Practice Assurance Monitoring 2023

The ICAEW has published its Practice Assurance Monitoring Report 2023, which summarises the results of its 1,509 practice assurance reviews in 2022.

In 2022 the ICAEW’s areas of focus for these reviews were:

• Professional indemnity insurance;
• Complaints; and
• Client satisfaction.

In this blog, we take a look at a selection of the key findings from these areas of focus, and common issues identified.

Overall outcomes

Compliance with the practice assurance standards is critical for ICAEW firms. Of the on-site reviews, only 18% of firms reviewed in 2022 passed their reviews with no matters requiring attention. Most had some matters for attention, and 7% of reviewed firms were reported to the practice assurance committee in for more significant non-compliance.

Professional indemnity insurance

Whilst most firms appeared to be compliant with the PII regulations, the findings give a reminder to take particular care in ensuring compliance with the ICAEW PII regulations minimum policy wording, or that the policy included an appropriate ‘difference in conditions’ clause. 5% of firms were not compliant in this area.

Complaints

Of the 1,509 firms reviewed in 2022, whilst 97% met the requirement to communicate details of the client’s right to complain to the ICAEW, to the client in writing, only 62% actually had a documented complaints procedure in place. All firms are advised to document their complaints procedure, although the documentation may be commensurate with the size and complexity of the firm.

Client satisfaction

Only 52% of firms had a method for obtaining feedback from clients, and only 35% requested feedback from all clients. It’s important to find out what clients think about the services provided and to address problems early on, so firms are advised to seek feedback from their clients on a regular basis.

Other findings

The reviews conducted in 2022 found many other areas where there were common issues. The top four of these were the following (all of which also featured in the top four last year too):

• Money Laundering Regulations
  

  Once again many firms lacked basic compliance with a failure to undertake a firm wide risk assessment or undertake appropriate customer due diligence on their clients. Using an appropriate package such as the ICAEW Anti-Money Laundering Service can aid compliance.
  
  

• Client Money Regulations
  

  Lack of bank trust letters, lack of clients’ money compliance review, not using designated accounts where so required by the regulations and using office accounts to hold client money were the most common issues. Firms are advised to carefully review the regulations and regularly check their compliance.
  
  

• ICAEW records and annual return
  

  Not notifying ICAEW of changes to firm structures within the required timeframe and making errors on the annual return were the most common issues. Firms must ensure that where there are changes, ICAEW is notified promptly (usually within 10 business days).
  
  

• Basis of fees and complaints, and engagement letters
  

  Not informing clients of the basis of fees they would be charged, or the firm’s complaints procedure were the most common findings. Both of these can be easily included in an engagement letter.