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Regulatory audit guide

Regulatory audit guide

As a professional body with a Royal Charter and to ensure compliance with its Rules of Conduct, RICS is obliged to investigate the conduct of, and complaints received, about its members and regulated firms.

As part of its professional assurance function and further means of fulfilling its obligations as a regulator, RICS Regulation undertakes monitoring of its members and regulated firms.

This monitoring is risk-based and conducted by a combination of desk-based audits (where we do not visit your premises) and on-site audits (where we visit your premises). Our professional audit team have a multi-disciplinary set of technical skills, and are primarily from a surveying, audit and accountancy background.

The audits we carry out are in addition to the collection of regulatory information through the Annual Return process which firms need to complete when requested to do so following their initial registration, and are a means of us interacting with the firm and member base and providing further assurance that their surveying practices and internal controls are of a high standard.

These audits are detailed reviews by specialists on specific areas of practice (valuations, client money controls and processes and insurance mediation services). As part of the audit we provide a written report on the audit findings, and where relevant provide recommendations on improvements to internal processes and controls. This includes adherence to Red Book Valuation standards and internationally-recognised best practice in financial controls.

Regulatory audits will be determined using a risk-based approach primarily using the data submitted in the Annual Return.

Other reasons for why a member or firm has been selected for audit may include:

  • if the firm has recently set up in practice
  • if RICS has received complaints against the firm in the specific areas of valuation, client money holding or insurance mediation work
  • a request has been passed to the Professional Audit Team from another part of RICS Regulation.

RICS Regulation regulates in the public interest to ensure that firms achieve and maintain compliance with the rules. It does this by working with firms through analysing regulatory data and auditing compliance with standards. The common objective is to maintain and improve the service to regulated firm's clients, and the protection of the public. The audit will be undertaken by a member of RICS staff who is an expert at applying, monitoring and enforcing the standards that are being audited.

Audit types and stages

  • The information you will need on the day of the audit will be documented in a RICS' notification letter to the firm/member which will be sent to you in advance of the visit, as detailed in our Regulatory rules:

    Rule 14 for firms and Rule 8 for members – Members and firms shall submit in a timely manner such information about its activities, and in such form, as the Regulatory Board may reasonably require.

    Rule 15 for firms and Rule 9 for members – Members and firms shall cooperate fully with RICS staff and any person appointed by the Regulatory Board.

    On the day of the visit you will need to:

    • ensure that the appropriate firm's principal or appointed member of the firm's staff are available to assist RICS' review
    • ensure that all documentation requested will be available.

    On the day of the audit there will be an opening discussion with the firm's principal and/or accountant regarding some preliminary questions about the firm's/member's operations. The auditor(s) will then review the appropriate records and documentation and undertake testing and assessment of the firm's practice and procedures. There will then be a final meeting with the appropriate principal and staff to feedback findings.

    The audit duration will depend on the level of activity that your firm undertakes (size of the firm). You will be notified of the likely number of days the audit will take.

  • These audits will be completed off-site and you will be required to send us information and documents electronically in advance of the audit. The information that you are required to send us will be documented in a RICS' notification letter to the firm/member, sent via email and in advance of the audit.

    The documents that we request will include lists and populations of data from which we will then pick a sample to audit in detail e.g. for valuation audits we may ask you upload a list of all valuers in the firm or a list of all valuations carried out by a particular registered valuer from which we will pick a sample to audit in depth.

    As part of a desk-based review you must:

    • upload the documents requested onto a secure shared area, which we will provide a secure link to facilitate this upload
    • expect a follow up call from us with regards to the documents supplied and to discuss any issues found – this will be scheduled at a convenient time.

    In order to upload your documents, you will be sent an email by RICS who will invite you to join 'SharePoint' – a secure area for your requested documents.

    If the documents uploaded to the secure shared area are not adequate or do not reflect what has been requested, you will receive a call or contact from a team member who will clarify what is actually required. From the lists and populations of data we may then choose a sample which we will audit in depth e.g. for a valuation audit we will pick a particular valuation and all the relevant documents to audit in depth. The samples picked will need to be uploaded in the same way as described above.

    The closing meeting to discuss the findings will take place with the appropriate principal and staff via a conference call. The meeting format will be to report on matters requiring action.

  • After the audit (desk- based or on-site), you will receive a copy of the report within 21 days and your responses will be requested within 14 days. The report will identify any areas of non-compliance and also any additional points requiring attention. Where serious issues are found this may result in an investigation and/or an on-site follow up audit. Where there are no issues arising from the report requiring clarification, you will be notified that the audit has been closed.

    Where matters continue to be identified following your initial response dialogue between RICS and the firms representative will continue. If your responses do not give RICS the required assurances further investigation will take place and this may lead to disciplinary action.