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This is from Sky News:
Audit firms are not doing enough to check that British financial services firms protect their clients' money and tougher rules are needed to ensure that they improve their scrutiny, the industry watchdog said on Monday.
A review of auditors' reports on client assets uncovered "serious failings," the UK's Financial Services Authority said, adding that it had referred some of the auditors responsible to their professional body, the Institute of Chartered Accountants in England and Wales.
"We have repeatedly emphasised the importance of firms segregating client money and assets effectively," Richard Sutcliffe, the FSA's client assets sector leader, said in a statement.
"It is ultimately a firm's responsibility to ensure that they have adequate systems in place, but they, as we, rely on their auditors to provide the necessary assurance."
The failings identified by the FSA include auditors providing "clean" reports despite a company having committed breaches of client asset rules, auditors submitting reports several months late, and basic errors such as not signing off on reports.
The accounting industry, still under pressure after audit firm Arthur Andersen failed to spot problems at failed U.S. energy trading company Enron in 2001, has faced renewed scrutiny in the wake of the credit crisis.
Regulators have questioned why auditors signed off on assets that turned toxic in the credit crunch, requiring taxpayers to bail out banks.
The FSA set out a series of proposals aimed at clarifying the standards required of client asset audits and increasing the amount of information that auditors must put in their reports. The proposals are open for consultation until December 31.
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