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    PRA Letter Sets Out Expectations for Reliability of Regulatory Returns

    October 31, 2019

    PRA published a letter that sets out expectations from firms on the actions they need to take to ensure the integrity and reliability of regulatory returns. This letter from the Executive Directors Sarah Bredeen and David Bailey is addressed to the Chief Executive Officers (CEOs) of PRA-regulated banks and building societies. The letter notes that an Independent Review of the Prudential Supervision by The Co-operative Bank Plc has recommended that PRA should consider introducing more formal third-party reviews of key prudential information supplied by the PRA-supervised firms through their regulatory data returns.

    Examples of errors in regulatory reporting (both public and those identified in the business as usual supervision) have further underlined the need for appropriate investment in both the integrity of data and the ability to process them accurately. If asked, PRA expects firms to be able to respond promptly to a request from PRA to: 

    • Demonstrate how the design and operation of the governance, controls, and other processes deliver regulatory reporting of appropriate quality
    • Provide details of the key interpretations and judgments made related to regulatory returns and the governance processes used to validate these
    • Provide details of any material regulatory reporting errors identified, along with an explanation of the actions taken to remediate these issues

    The actions taken to ensure the integrity of returns could, for example, include regular, comprehensive reviews of the effectiveness of the governance, controls, and other processes around regulatory returns to ensure that they are fit for purpose and to perform deep dives that look at the accuracy of the returns. 

    As part of the ongoing focus on the integrity of regulatory reporting, PRA intends to commission reports from skilled persons. This work will focus on the Common Reporting framework and will also incorporate other related returns, including newly introduced returns such as the PRA110 Cashflow mismatch template. The reviews may involve a reasonable assurance opinion on whether the return reviewed has been properly prepared; a review of the relevant governance, controls, and other processes; and the gathering of information that will enable PRA to review the key interpretations applied in preparing the return. PRA expects the main focus of these reviews to be on the larger firms. As part of the reviews, firms should expect PRA to consider the full range of supervisory responses wherever concerns exist.

     

    Related Link: Letter

     

    Keywords: Europe, UK, Banking, Reporting, PRA110, Governance, Controls, COREP, PRA

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