CASS reconciliation: Why it matters and why you should automate it

Finance teams at Financial Conduct Authority (FCA)-regulated firms face a recurring challenge: Client Assets Sourcebook (CASS) reconciliation. Daily reconciliations that take hours to complete, manual data collection from multiple sources, and the constant pressure of regulatory deadlines create a bottleneck that pulls your team away from strategic work.

CASS compliance failures result in significant regulatory fines and reputational damage. More importantly, proper reconciliation protects client assets and ensures your firm can demonstrate control effectiveness during FCA supervision.

Let’s look into what CASS reconciliation requires, why it's challenging with manual processes, and how automation addresses these challenges without compromising accuracy or auditability.

What is CASS reconciliation?

CASS reconciliation is the process of verifying that client money and assets are properly segregated and accounted for in line with the FCA's Client Assets Sourcebook rules. Investment firms, asset managers, brokers, and other financial services firms subject to CASS 7 for client money and CASS 6 for custody assets must perform these reconciliations to protect client assets.

The core requirement is simple: your internal records must match external records from banks and custodians. Any discrepancies need to be identified, investigated, and resolved. If you find a shortfall in client money, you must top it up by the same business day.

While the rules require external reconciliations at least monthly, most firms reconcile daily or at T+1. Monthly reconciliation makes it difficult to identify and resolve breaks quickly, and the FCA expects daily reconciliation as best practice.

What makes CASS reconciliation challenging

The complexity of CASS reconciliation grows with transaction volume and the number of banking relationships. Manual data operations, like collection and standardization, can take hours each week, and for firms with banking relationships across multiple jurisdictions, this process multiplies.

• Transaction matching becomes complicated when you're dealing with timing differences, FX conversions, fees deducted at different stages, or transactions that appear differently in internal records versus bank statements. A payment that looks like one transaction internally might appear as multiple line items on a bank statement after currency conversion and intermediary fees.
• Exception handling requires investigation. When transactions don't match, someone needs to determine why. Is it a timing difference that will resolve tomorrow? A missing transaction? Or a bank fee that wasn't captured? Each unmatched item demands context and judgment.
• Documentation requirements add another layer. You have to maintain a comprehensive audit trail showing what was reconciled, when, by whom, and how discrepancies were resolved.
• Error risk increases with manual processes. Copying data between systems, manually matching transactions, and performing calculations in spreadsheets create opportunities for mistakes and cause issues during audits.

The traditional CASS reconciliation process

Most companies follow a similar manual workflow:

1. Download statements from each bank portal.
2. Export transaction data from the internal accounting system.
3. Standardize everything into a unified Excel structure.
4. Match transactions between sources using VLOOKUPs or manual comparison.
5. Flag unmatched items for investigation.

The process repeats daily, consuming valuable hours that could be spent on analysis rather than data collection.

Best practices for CASS reconciliation

Effective CASS reconciliation starts with process design, not just technology.

1. Automate data collection where possible. Direct integrations with banks, custodians, and accounting systems eliminate manual downloads and reduce error risk. Where APIs aren't available, automated file retrieval still saves time compared to manual portal login.
2. Standardize data formats across sources. Establishing a common data structure makes reconciliation faster and more reliable. When done manually, this is the most time-consuming and error-prone process. Automating data standardization allows your team to instead work on tasks with a higher impact.
3. Maintain comprehensive audit trails. Every reconciliation, break, and resolution should be logged with sufficient detail to satisfy auditors and regulators. This documentation demonstrates control effectiveness during FCA supervision.
4. Conduct regular process reviews and tests to make sure your reconciliation process remains efficient even as transaction patterns change or new vendors are added.

How Reiterate OS automates CASS reconciliation

Reiterate OS automates your entire CASS reconciliation by connecting to your banks, custodians, and internal accounting systems and gathering and standardizing reconciliation data automatically. Transaction matching runs continuously and exceptions are flagged with context that helps teams resolve them quickly. The system maintains a complete audit trail and generates compliance documentation automatically.

You can set up Reiterate OS workflows for your specific reconciliation requirements. Configure the data sources you need to reconcile, define your matching rules, and schedule the workflow to run daily or at whatever frequency you need. Reiterate OS handles the execution, monitoring, and documentation.

Here's how you will benefit:

Time savings are immediate. If you spent hours weekly on CASS reconciliation, you can reduce that to under an hour.

Error rates drop. Automated matching eliminates manual errors, miscalculations, and the change tracking problems that are common in spreadsheet-based processes. Your audit outcomes improve and regulatory confidence increases.

Teams can focus on high-value work. The hours freed by automation can be redirected to investigation, process improvement, and strategic finance activities instead of downloading statements and copying data.

Compliance confidence increases. Reconciliation happens consistently every day with full documentation. There's no risk that someone forgot to download a statement or that a discrepancy went unnoticed because of time pressure.

Scalable processes. As transaction volumes grow or new service partners are added, automated workflows handle the increased complexity without proportional increases in team time.

CASS reconciliation doesn't have to be a daily bottleneck

CASS reconciliation protects client assets and keeps your firm compliant, but it shouldn't consume your finance team's full capacity. Automation preserves the accuracy and auditability that regulations require while eliminating the manual overhead that makes reconciliation time-consuming and error-prone.

Reiterate OS automates the end-to-end CASS reconciliation workflow, from data collection through transaction matching, exception handling, and audit documentation. Your team gets hours back each day without compromising the control environment.

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