Client Money reconciliation and reporting rules update - 3 months to go!
As LNP previously reported, these were released in October 2017 and apply from April 2018.
The new rules impose record keeping, reconciliation and reporting requirements on AFS Licensees that hold derivative retail client money within the meaning of Corporations Act, unless the same derivative is traded on a fully licensed domestic market.
The key requirements are;
Information relating to reportable client monies, must be provided within 5 days upon receiving a request from clients or ASIC.
Reconciliation and reporting
Three sets of reporting are required, daily, monthly, and annually.
The licensee must nominate a time for daily reconciliation for reportable client money for each person and in total, complete the reconciliation, and report the amounts in the client money trust accounts (with ADI’s), and the corresponding amounts in the licensee’s trading platforms (for example MT4). This must be done by on the third business day from the nominated time.
The licensee must nominate a time for the end of month reconciliation, which must be completed and sent to ASIC within 10 business days with similar information to the daily reconciliation.
The monthly reconciliation must include a statement signed by a director, or a person authorised by a director, stating that the signatory believes, and has no reason not to believe, that the reconciliation is accurate in all respects.
Reporting and annual declaration
The licensee must declare that the licensee has complied with the new client money rules.
A 'type II operating effectiveness of internal controls audit report' relating to reportable client monies must be provided by an external auditor.
This audit report may be supplied by your external auditor if they have the expertise, or maybe provided by another auditor with the requisite expertise. LNP Audit and Assurance has this expertise we provide services to a large number of forex and CFD providers and provide type II audit reports to a range of clients.
What you should think about doing now, if not already commenced is to:
Define and implement reconciliation processes, which may involve developing new or improved systems and might be a good opportunity to gain efficiency, and
Define and agree the audit report on these processes,
Get help and advice if you think you need it. LNP Audit and Assurance would be most willing to assist.