The client, their challenge
Gravita audits a small bank that is regulated by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) in the UK. As part of the audit, an audit expert was required to assist with work relating to the going concern of the bank. Gravita contacted IQ-EQ for assistance with reviewing the bank’s internal capital adequacy assessment process (ICAAP), internal liquidity adequacy assessment process (ILAAP) and to undertake a mix of audit work on the bank’s internally prepared going concern assessment (GCA). The purpose of this review was to enable Gravita to determine the bank’s ability to continue to trade as a going concern whilst acknowledging the bank’s commercial activities, the PRA’s capital adequacy requirements and other potential financial constraints on the bank.
The principal challenge arising from this work was the quality and timeliness of the information delivered by the bank due to a number of internal issues, including the changing regulatory landscape and performance of bonds post balance sheet. As a result, completion of the work stream was significantly slower than the expectations of IQ-EQ, Gravita and their client.
Our solution
Working on behalf of Gravita, we conducted an in-depth analysis of all the documentation used by the bank to draft its internal GCA, which is subject to approval by the Board. Following our analysis, we forwarded a series of questions to Gravita and the bank. As a result, the bank made substantive changes to its internal GCA. Following these changes, we were able to draft an independent assessment report and complete the necessary audit work for Gravita relating to the bank’s GCA, augmenting their own work towards issuing the GCA.
The result
In our role as the auditor’s expert, we delivered a detailed report and the necessary working papers of our findings. The report and work were designed to reassure Gravita in determining that the bank adhered to PRA regulations and that assumptions were reasonable given the industry the entity operated within. This enabled Gravita to issue a clean audit report in connection with the GCA.
The quality of our analysis strengthened the institutional relationship with Gravita, both for them to outsource further work to us as a client and to refer business opportunities to us as a business partner.
Click here to find out more about IQ-EQ’s UK compliance consulting services.
Gravita is a full service, top 40 accountancy firm, providing audit, accounting, outsourcing, tax, advisory support and more. The Gravita team has supported the financial services sector, including both PRA and FCA regulated businesses, for decades. Through its extended experience in providing audits, including CASS audits to regulated businesses, Gravita has worked with IQ-EQ for many years, supporting clients who need specialist support in this complex sector. Gravita is a member of DFK International, a global alliance of accounting firms and their expert teams, working closely together across more than 450 offices in over 90 countries.
