ICI Updates Framework for Oversight of Fund Industry Intermediaries

The Investment Company Institute (ICI) updated the framework for its Financial Intermediary Controls and Compliance Assessment (FICCA). The framework provides guidance for financial intermediaries that engage independent accountants to report on control and compliance environments, as well as for mutual fund complexes that use such reports as part of their due diligence programs.

The updated framework is intended to improve oversight and increase efficiency, transparency and flexibility for intermediaries. A review of the framework's 17 areas of focus by a working group of ICI member firms resulted in various changes. These include: i) the removal of Financial Viability as a category (given this topic's coverage in the intermediary's audited financial statements); ii) the addition of State of Sale Reporting (for Blue Sky purposes) as a new category emphasizing adequate reporting of sales state by state; and iii) a reorganization of categories, including non-control focus areas such as Management Reporting, the Risk Governance Program and Third-Party Oversight, which are now segregated from the management assertion report and the independent account's examination. Updates to the 2015 FICCA framework include the following:

• conforming requirements for several control items to the attestation standards of the American Institute of Certified Accountants;
• clarifying that an intermediary's controls should address the oversight of third-party vendors to which the intermediary has outsourced tasks in areas of focus that are identified in the framework;
• streamlining compliance monitoring and annual independent testing of the intermediary's anti-money laundering and prevention of terrorist financing programs; and
• clarifying the intermediary's role in providing data to the fund or its designated Blue Sky agent.