ICAEW publishes guidance on providing assurance over benchmarks and indices

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27 Feb 2014

The Institute of Chartered Accountants in England and Wales (ICAEW) has today published guidance for auditors on how to provide assurance to their clients that benchmarks and indices are based on robust and reliable processes and are consistently applied.

The guidance has been issued in order to restore damaged confidence in the reliability of market indices and benchmarks in the wake of recent alleged manipulation in LIBOR and FOREX markets.  It will allow submitters to, and providers of, market rates, indices and benchmarks to obtain assurance based upon an agreed framework. 

The ICAEW comment: 

Confidence in benchmarks, indices and market rates is vital to a well-functioning financial system.  These rates can affect not only market transactions but the prices people pay for energy bills, petrol, foreign exchange and mortgages. 

The guidance, written for “audit and assurance practitioners who will undertake to express an opinion on benchmark or index submissions and compilations” covers areas such as:

  • Agreeing the engagement;
  • Planning and performing the engagement; and
  • Reporting and documentation 

Although, directed at auditors, the ICAEW highlight that the guidance will also be of interest to other parties such as compilers and publishers of benchmarks and indices and directors of companies and institutions which contribute to a benchmark, index or other reported price compilation. 

The guidance, ‘TECH02/14FSF: Assurance reports on benchmarks and indices’ can be downloaded from the ICAEW website.

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