External audit requirements for investment management and securities and futures firms

External audit requirements for investment management firms; securities and futures firms; or personal investment firms (not small) – which in any case is not a BIPRU investment firm, an exempt CAD firm (or an exempt BIPRU commodities firm).

This covers several firm types:

  • investment management firms
  • securities and futures firms
  • personal investment firms (not small)

Incorporated entities (limited liability company or limited liability partnership) regulated by the FCA​

Accounts audit (Companies Act)

Under the Companies Act legislation you are required to appoint a statutory auditor who performs an annual external audit on the firm's accounts.

However, for financial years ending on or after 31 December 2006, under the Companies Act legislation you are not required to appoint a statutory auditor who performs an annual external audit on the firm's accounts if:

  • you meet the Companies Act criteria for the small companies audit exemption, and
  • you do not undertake any activity within the scope of MiFID, UCITS Directive, Banking Consolidation Directive or the Insurance Directives, and are not an e-money issuer

The small companies audit exemption is available if at least two of the following criteria are met:

  • the annual turnover is not more than £10.2m
  • the balance sheet total for the year is not more than £5.1m
  • the company has 50 or fewer employees on average

Client assets report (FCA rules)

You are required to appoint an auditor to report to the FCA on your firm's client assets if you are required to appoint a statutory auditor. You will also be required to do so if you have permission to hold client assets.

Unincorporated entities (sole trader or a partnership)

Accounts audit

If you are an unincorporated entity (i.e. you are a sole trader or a partnership), you do not need to appoint an auditor under the Companies Act legislation.

Client assets report (FCA rules)

If you have permission to hold client assets, you are required to appoint an auditor who must report to the FCA on your firm's client assets.