The Central Bank of Ireland has issued mandates to Enhance Asset Valuation Compliance: Key Actions and Deadlines for Irish Fund Management Firms. A summary of these measures is provided below by our KFI team, who can help your business review its valuation policy and procedures to ensure they are compliant with Central Bank requisites.
On the 14th of December 2023 the Central Bank of Ireland issued a letter (PDF, 120 KB) addressed to the chairpersons of all Irish fund management companies as a result of the European Securities and Markets Authority’s (ESMA) review of Asset Valuations, which found a small amount of fund management firms not in compliance with regulatory standards concerning their asset valuation frameworks.
The Central Bank of Ireland’s letter outlines the primary findings of ESMA’s Asset Valuations review and specifies the essential actions the Central Bank expects all Irish fund management companies to undertake to address several issues identified in the ESMA report.
In light of the ESMA report, the Central Bank of Ireland has outlined a set of measures that all Irish fund management companies must implement by the end of Q2 2024.
What are the new measures that should be implemented?
1. Adequate Asset Valuation Policies
Irish fund management firms are required to possess asset valuation policies and procedures that are accurately detailed, thorough, and tailored to each fund management company. These documents should explicitly state the operational roles and responsibilities of each individual engaged in the valuation process. A firm’s valuation policies should also clearly state those responsible for reviewing and updating the policy.
2. Sufficient Policy Reviews
Senior management are responsible for reviewing all valuation documentation to ensure it remains suitable for its intended purpose. Valuation procedures should be reviewed annually at a minimum.
3. Procedures for Addressing Errors
The Central Bank of Ireland requires all fund management companies to establish structured and detailed procedures to deal with any valuation errors or inaccurate computations of Net Asset Value (NAV) to ensure corrective measures can be taken promptly if such errors occur. Procedures for addressing valuation errors must be reviewed at least annually and updated when necessary.
How could this affect your business?
Q2 2024 compliance deadline
By the end of Q2 2024, Irish fund management firms must ensure their valuation procedures are compliant with existing legislative requirements, while taking any additional actions required in light of the measures outlined above. If, after Q2 2024 the Central Bank of Ireland finds any firm failing to adhere to any of the requirements mentioned in this article, the Central Bank may take action to ensure compliance.
How KPMG can help
KPMG’s Financial Instruments (KFI) team consists of thirty people who provide expert and business-orientated independent valuation services, tailored to the unique requirements of our clients. The KFI team can help your business review its valuation policy and procedures to ensure they are compliant with Central Bank requisites.
The KFI team is readily available and eager to engage with you to identify the right solution for your business. We look forward to hearing from you.
