5.10 Application at the consolidated level and implications for group entities

At the consolidated level, in addition to the elements covered in the sections above, competent authorities should assess whether:

• a. the management body of the consolidating investment firm understands both the organisation of the group and the roles of its different entities, and the links and relationships among them;
• b. the organisational and legal structure of the group is clear and transparent, and suitable for the size and the complexity of the business and operations;
• c. the investment firm has established an effective group-wide management information and reporting system applicable to all business units and legal entities, and this information is available to the management body of the investment firm’s parent undertaking on a timely basis;
• d. the management body of the consolidating investment firm has established consistent group-wide strategies, including a group wide risk strategy and appetite framework;
• e. group risk management covers all material risks regardless of whether the risk arises from entities not subject to consolidation (including SPVs, SPEs, and property firms) and establishes a comprehensive view on all risks;
• f. where established, the group-wide internal audit function is independent, has a group-wide risk-based audit plan, is appropriately staffed and resourced, has appropriate stature and has a direct reporting line to the management body of the consolidating investment firm.

When conducting the assessment of internal governance and investment firm-wide controls at subsidiary level, in addition to the elements listed in this title, competent authorities should assess whether group-wide policies and procedures are implemented consistently at subsidiary level and whether group entities have taken steps to ensure that their operations are compliant with all applicable laws and regulations.