“If we find during a monitoring visit that a firm hasn’t reached the required standard then there might be some follow-up action,” explains Dean Neaves, Senior Manager, QAD, ICAEW.
“This will generally involve matters that are serious, where we need to see evidence that the firm has put corrective action in place,” he explains. “Or it might be that a firm's responses to our findings aren't sufficiently clear, and we need further evidence and clarification.”
When a monitoring visit report identifies matters warranting follow-up, QAD passes these reports to ICAEW’s Regulatory Practice and Policy (RPP) team where they are usually dealt with in one of two ways.
“Depending on the issues identified, some reports are dealt with by my team under delegated powers from the committee,” explains Helena Murray, Head of Regulatory Practice at ICAEW.
With these reports, the RPP case managers follow up on the points that QAD have raised and send out a detailed letter to the firm clearly identifying what they need to do. This could, for example, involve the firm getting an external review of a particular audit and then submitting it back to ICAEW. “Or it might be something like us needing to see evidence of your professional indemnity insurance or we may ask for further details as to how the firm has dealt with a technical matter on one of its engagements,” adds Helena.
“In other cases, we would make recommendations to the appropriate committee for follow-up action, and the committee would then request in a more formal way that the firm take the required actions.”
Get into the details
“Our key message to firms who find themselves subject to these follow-up processes is that when you receive the details of what you need to do to get up to standard, you should go through the correspondence carefully and follow up on each particular point,” says Dean.
This will help speed up the process and save your firm time and resources. “Cases can take longer to get closed out where we have to go back and ask for more information,” he explains. “And where the process generally becomes protracted is when firms have missed an element of the follow-up action or haven't dealt with it robustly enough.”
“Pay attention to your deadline too,” adds Helena. “If we’ve asked you for external reviews, remember that reviewers can be extremely busy. And if you need to turn something around quite quickly, unless you've already got it in the diary, it can be quite difficult.”
“Once you're on notice that you need an external review, get that booked in,” says Dean. “Don't delay - you need to be organised.”
ICAEW does not recommend or approve external reviewers. “This is a question firms often ask,” says Helena. “But you need to do your own research and approach a body with the necessary and appropriate experience to conduct that review.”
Always ask
Although ICAEW can’t recommend reviewers, case managers are always happy to answer any queries firms might have about what’s required or expected.
“If you're struggling to understand any aspects of the follow-up action, do contact your case manager,” says Dean. “We'd much rather provide you with help at the outset than have a situation where something comes in that is substandard and/or incomplete, and then it goes back and forth.”
To make the process as transparent as possible, case managers regularly update firms on progress. “If there are multiple points and you are dealing with them individually, the case manager will write to you to say which points are resolved and which are still outstanding,” says Dean. “So you’ll be able to track where you are.”
“And again, if you have any doubts on that, your case manager is your point of contact,” stresses Helena. “So please use that resource, pick up the phone and check where you are with things.”
Take the opportunity
The follow-up process is designed to ensure all firms are operating to required standards and are compliant with regulations, which is ultimately about protecting the public interest.
“Where we need to follow up with you, we're doing it because we need to make sure that you and your firm have properly understood where, and how, you need to improve,” says Dean.
“It's a serious process that you shouldn't take lightly,” emphasises Helena. “And we need to see that your firm is engaged in that process.”
Many firms appreciate the points raised by QAD and recognise they are aimed at improving compliance and practice. “They see it as an opportunity to change and to put in some new procedures and processes that can help the firm going forward,” says Helena.
But the process can also be expensive and time consuming. “And we also understand and recognise that,” she adds. “So the more you can do to get it right first time, the better it is for your firm and the quicker you can move on.”
“In summary, we ask that you review the details, get organised, put the time and effort in, and get in touch with us if you've got any questions,” advises Dean. “That will help us conclude the process as efficiently and effectively as possible, ensure you stay compliant, and improve your practice.”
