AFS licensees audit guidance

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The Australian Securities and Investments Commission (ASIC) and Auditing and Assurance Standards Board (AUASB) have reaffirmed audit and review requirements for auditors of AFS licensees through the recent issuance of:

Guidance Statement 003 “Audit and Review Requirements for Australian Financial Services Licensees under the Corporations Act” (AUASB website)
updated ASIC Forms FS70 and FS71 (ASIC website)
updated Regulatory Guide 34 “Auditor’s obligations: reporting to ASIC” (RG 34) (ASIC website)

GS 003 provides guidance for auditors of AFS licensees in relation to the audit and review requirements under the AUASB’s Auditing Standards (ASAs), Standards on Assurance Engagements (ASAEs), Standards on Review Engagements (ASREs) and the Corporations Act. It was issued in early November 2007, replacing AGS 1068 and was applicable from 31 October 2007. In particular the revised guidance covers the statement by the auditor, in relation to section 990K(2) of the Act, as required in the FS 71 “Audit Report” that is required to be lodged with ASIC, detailing any matters the auditor has become aware of during or since the financial year that have not previously been reported to ASIC.

ASIC has also now inserted related guidance dealing with section 990K into RG 34. Previously, RG 34 only provided guidance to auditors of companies and registered schemes relating to the reporting of certain and suspected contraventions of s311 and s601HG. The new guide was released in late December.

The new section 990K statement has significant implications for auditors of AFS licensees, including:

the performance of additional review procedures in the period between balance date and the date the auditor signs the FS71
consideration of which s990K breaches are reported to ASIC at year end

Auditors are reminded to ensure they actively consider these requirements when auditing AFS licensees.

Institute training
The Institute will be offering training in the audit of AFS licensees in April 2008, which will cover these requirements. The 3-hour seminar will follow a 3-hour audit update. The dates for this training are:

Sydney: 1 April 2008
Brisbane: 3 April 2008
Adelaide: 14 April 2008
Perth: 17 April 2008
Melbourne: 29 April 2008

Details will be available on the training and development website soon.

This article was published in ANT01/2008 and is current up to 18 January 2008