United Kingdom Parliament Treasury Committee: FCA Internal Audit Reports

• Impact of Internal Audit work - explanation of key issues (March 2014)
• FCA Internal Audit final report - A review of risk management and the implementation of the first and second lines of defence (March 2014)
• Internal Audit Reports - explanatory note
• FCA Internal Audit final report - A review of the Supervisory Oversight Function (SOF) (April 2014)
• FCA Summary of key issues (March - May 2014)
• FCA Internal Audit final report - the UK Listing Authority (March 2014)
• Explanation of key issues identified in our work - Software asset management (SAM) (August 2014)
• FCA Internal Audit final report - A review of authorisation processes for dual-regulated firms (August 2014)
• FCA Internal Audit report - A review of the Customer Contact Centre (CCC) (August 2014)
• FCA Internal Audit report - A review of the adequacy and effectiveness of controls for Software Asset Management (SAM) (August 2014)

Right Hon. Andrew Tyrie MP, Chairman of the Treasury Committee, said:

“Eighteen months ago, the Committee sought reassurance that the FCA’s internal audit work is of a reasonable standard. Those for the period between January 2014 and September 2014 have been obtained. They are now being published. They contain a number of redactions, which have been examined on behalf of the Committee prior to publication. The undertaking of this work reflects the determination of the Committee, on behalf of Parliament, to engage in more rigorous scrutiny of the regulators, than had been the case prior to the financial crisis.

“These documents provide some useful evidence that the internal audit system appears to be working. The Committee will continue to examine the FCA’s governance as part of it regular scrutiny of the FCA.”

Notes to editors

 - During a session on 4 February 2014, the Chairman of the FCA, John Griffith-Jones, undertook to consider and respond to the request to share their internal audit reports with the Treasury Committee.

Q172 Chair: I think we would like all the information that is available. The FCA also does internal audit reports. Do those come directly to you Mr Griffiths-Jones?

John Griffith-Jones: They do, or at least the executive summary comes to me and the full report goes to the audit committee that meets four times a year, on which I sit but I do not chair.

Q173 Chair: The Committee would be very grateful if we could see those henceforth.

John Griffith-Jones: Can I take a rain check on that one?

Chair: I think you can take a rain check on a discussion with me about whether any redactions may be necessary. But if you are telling me you want a rain check on whether they can be supplied to the Committee, I think there will be a major problem.

- On 3 March 2014, the Chairman of the FCA wrote to Andrew Tyrie MP, Chairman of the Treasury Committee to turn down this request.

- During a session on 9 September 2014, the issue was again raised with the Chairman of the FCA:

Q154 John Thurso: I will come to you first, Mr Griffith-Jones. All my questions are about the relationship between yourselves and this Committee—the co-operation with the Committee. There are three areas where we have asked for papers or asked to see things recently where, for one reason or another, you felt unable to comply. The first was over a request to see internal audit reports, the second was on some legal advice, and the third was relating to deals with banks. I will take you to those in turn and start with the internal audit reports: if we were to insist on seeing those, on what grounds would you resist us?

John Griffith-Jones: My understanding is that if you insist, you insist. As I said—I think in real time at the last hearing, and as I wrote to your Chairman subsequently—I beg you to consider the arguments about giving us a protected space in which to do our work, of which receiving reports about things that are not quite right, frankly, and putting it right is a wholly necessary part of every organisation’s function. If you shed a spotlight into that in real time, you alter the behaviour of the people in the protected space and make my job more difficult to do regulation work. That is my only reason. I completely understand that if something goes wrong, you hold us to account afterwards, and if you say, “Was there an internal audit report on this, and did you act on it?” that is completely for the public domain.

- On 26th March 2015, John Griffith-Jones, the FCA’s Chairman, wrote to Andrew Tyrie MP, Chairman of the Treasury Select Committee, agreeing to provide the Committee with copies of the internal audit reports.

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