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Assurance on internal controls of services organisations (AAF 01/06)

Working with the National Association of Pension Funds and service providers, the ICAEW issued AAF 01/06 - 'Assurance reports on internal controls of service organisations made available to third parties' . AAF 01/06 supports assurance engagements to provide comfort over the design, implementation and operating effectiveness of controls.

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The main body of the guidance has not been changed since then, though additions and alterations have been made to the appendices. The core guidance is also supported by supplements relating to specific situations.

What’s new?

As new opportunities continue to arise for assurance reporting on the internal controls of service organisations, new material continues to be developed.

Stewardship Supplement revised November 2012

The revised UK Stewardship Code was issued by the Financial Reporting Council in September 2012. ICAEW has responded with a revised Stewardship Supplement to AAF 01/06.

This revised Stewardship Supplement was released on 6 November 2012, the twentieth anniversary of the issue of the Cadbury Report which was a seminal moment in the development of corporate guidance worldwide. ICAEW’s CEO, Michael Izza, discussed this in his blog.

There was no change to the main body of the guidance.

Article: Access to controls reports at service organisations

This article provides a brief explanation of who should be able to view reports on internal controls of service organisations, and the assurance reports thereon, and how difficulties in arranging access can be overcome.

What has been done?

Since its first publication in 2006, a great deal of work has been done to support and surround AAF 01/06. The most significant developments are listed here.

Stewardship Supplement introduced March 2011

The UK Stewardship Code was issued by the Financial Reporting Council in July 2011. The Stewardship Supplement to AAF 01/06 was released to assist asset managers to obtain an independent assurance report on their commitment to the UK Stewardship Code based on the framework set out in AAF 01/06. This guidance on assurance reporting focused on Principles 1, 2, 6 and 7 of the Code that were considered ‘objectively verifiable’ at the time of the release of the Supplement.

An earlier draft was exposed for comment and the analysis of responses is available from the link below.

The FRC issued its revised UK Stewardship Code in September 2012, and ICAEW has revised the Stewardship Supplement in response. See details under the ‘What’s new?’ section above.

There was no change to the main body of the guidance.

Appendix 8 introduced November 2010

In November 2012 a new pro forma reporting accountants’ assurance report implementing International Standard on Assurance Engagements (ISAE) 3402 Assurance reports on Controls at a Service Organisations (issued by the IAASB in December 2009) was included in Appendix 8. To enable issuers to report on controls other than financial reporting controls, the report refers to ISAE 3000 in addition to ISAE 3402.

There was no change to the main body of the guidance.

Appendix 1 expanded June 2009

In June 2009, ICAEW expanded Appendix 1 to add illustrative material for service providers who undertake investment administration, private equity management and hedge fund management (Appendix 1 (h)-(j)). Conforming changes to the existing control objectives for other sectors were also made (Appendix 1 (b) and (e)).

There was no change to the main body of the guidance.

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