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QUALITY REVIEW PROGRAMGUIDELINES FOR THE PREPARATION OF REPORTS ON REVIEW FINDINGS

2 | Guidelines for the preparation of reports on review findings

OVERVIEW

This document provides guidelines for the preparation of a Quality Review Report or a Follow Up Review Report.

Reviewers should use these guidelines when preparing a report on a Quality Review, to ensure the appropriate type and format of report is prepared.

ITEMS INCLUDED IN THESE GUIDELINES: REFER PAGES

Types of report that can be issued on the review findings 3

Examples of review findings and the nature of report appropriate 6 – 59

Examples of reasons for inclusion in:

Recommendation – Requirements for Compliance to be provided; or

Recommendation – Representation for Compliance to be provided; or

Recommendation – Evidence for Compliance to be provided; or

Recommendation – Follow-up review reports

6 – 59

PRIVACY In this Privacy Statement, “Personal Information” has the same meaning as in the Privacy Act 1988 (Cth). CPA Australia Ltd is committed to protecting the privacy and security of the Personal Information which it holds about you. The Personal Information which you provide us with in this Questionnaire will be used by CPA Australia Ltd to process your Quality Review; and may be used for aggregated statistics for monitoring and research. This information may be viewed by the CPA Australia Quality Review Advisory Committee and also the Financial Reporting Council and any other Regulatory authority. If you do not provide us with this Personal Information, we may not be able to process your review. You have the right to access any Personal Information which CPA Australia Ltd holds about you, subject to the exceptions in the Privacy Act 1988 (Cth). You may also request the correction of information which is inaccurate. Access and/or correction requests can be made at your local CPA Australia office. For more information on CPA Australia’s Privacy Policy, visit our website at cpaaustralia.com.au/privacypolicy


TYPES OF REVIEW REPORT At the end of a review, the reviewer issues a member with a report with one of the following outcomes:

1. Compliant

2. Requirement for compliance

3. Representation of compliance

4. Evidence of compliance

5. Follow up Report

Each report outcome is defined below. Attached are guidelines which suggest a report outcome for each possible breach. Reviewers should understand that these are guidelines only. Reviewers are encouraged to apply their professional judgement when deciding the outcome of the review. CPA Australia relies on the discretion of the reviewer, especially since it is the reviewer that visited the practice, met with the public certificate holder and reviewed the files. Further, a member in unlikely to breach one part of a standard in isolation, and as different breaches may result in different outcomes, the reviewer must use their professional judgment to decide on the most appropriate and fair outcome.

Please note: where the member makes changes to their system to remedy a breach, the reviewer then sights these changes and is assured that the breach will not occur again, it may result in the reviewer changing their outcome of the review. In such circumstances, the recommendation should likely be a “Requirements for Compliance” outcome.

1. REPORT ON MEMBER’S COMPLIANCE WITH QUALITY CONTROL SYSTEM: RECOMMENDATION –

“COMPLIANT”: • where the Reviewer is of the opinion that the member’s system of quality control at the date of review provides reasonable assurance that the

objectives and requirements of the quality control standards of APESB (Accounting and Professional Ethics Standards Board), other professional standards, and regulatory and legal requirements are met in the conduct of the practice.

• this report should be accompanied by a Reviewer’s Summary – Other Matters report.

• the Reviewer’s Summary – Other Matters report should not identify areas of non-compliance with mandatory standards.

• if the Reviewer identified areas of non-compliance, a Report Recommendation of “Compliance” should not be issued and the report should then be considered under one of the other Report Recommendations.


“REQUIREMENTS FOR COMPLIANCE”: • where the Reviewer is of the opinion that the quality control system at the date of review should be subject to minor remedial action to ensure

that the objectives and the requirements of the quality control standards of APESB, other professional standards and regulatory and legal requirements are met in the conduct of the practice.


• the Reviewer’s Summary – Other Matters report should identify only minor areas of non-compliance with mandatory standards.

• the Reviewer’s Summary – Matters Leading to a “Requirements for Compliance” Recommendation report should detail the specific findings with regard to each instance of non-compliance identified and include specific recommendations as to how the Member can ensure compliance in each area.

• details of the requirements for compliance and specific recommendations will be outlined in a letter from CPA Australia to the member. If this category of report is issued then while remedial action is required, no further submissions to CPA Australia are required and the review is considered complete.


“REPRESENTATION FOR COMPLIANCE”: • where the Reviewer is of the opinion that the quality control system at the date of review requires a written undertaking of future compliance to

ensure that the objectives and the requirements of the quality control standards of APESB, the professional standards and regulatory and legal requirements are met in the conduct of the practice.


• the Reviewer’s Summary – Other Matters report should identify the areas of non-compliance with mandatory standards.

• the Reviewer’s Summary – Matters Leading to a “Representation for Compliance” Recommendation report should detail the specific findings with regard to each instance of non-compliance identified and include specific recommendations as to how the Member can ensure compliance in each area.

• details of the undertaking(s) required are outlined in a letter from CPA Australia. If this category of report is issued then the member will need to provide the undertaking requested before the review is considered complete.


4. REPORT ON MEMBER’S COMPLIANCE WITH QUALITY CONTROL STANDARD: RECOMMENDATION – “EVIDENCE OF COMPLIANCE”

• the Reviewer should issue this type of the report when it is considered that the system of quality control should be subject to evidence of compliance being provided before the obligations under the quality review program be finalised.

• where a Reviewer is unsure whether a Recommendation – “Evidence of Compliance” is to be provided report it is appropriate in a particular instance, the Quality Review Department should be contacted directly for an opinion.

• the report should be accompanied by a Reviewer’s Summary – Matters Leading to “Evidence of Compliance” Recommendation and a Reviewer’s Summary – Other Matters report.

• the Reviewer’s Summary – Matters Leading to “Evidence of Compliance” Recommendation report should detail the specific findings with regard to each instance of non-compliance identified and include specific recommendations as to how the Member can ensure compliance in each area.

• when a Recommendation – “Evidence of Compliance” is issued, details of the documentation to be provided by the member are outlined in the report. The Reviewer should advise the Member to submit a written assurance together with supporting evidence with their signed report. This allows the Quality Review Department to consider the report and evidence concurrently and speed up the acceptance process. For example, where there has been a non-compliance with report format requirements (e.g. APES 205.6 and APES 315), the Member should be advised to submit evidence that the correct reporting format will be used for future engagements together with an example of the report format to be used.

• If the written assurance and the supporting evidence is not submitted with the review report, it will be further requested in correspondence from CPA Australia.

• If this category of report is issued then the member will need to provide the assurances and supporting evidence requested before the review is considered complete.

5. REPORT ON MEMBER’S COMPLIANCE WITH QUALITY CONTROL STANDARD: RECOMMENDATION –

“FOLLOW-UP REVIEW”: • the Reviewer should issue this type of the report when:

– the Reviewer has identified inadequacies in the quality control system and is of the opinion that these inadequacies have resulted in situations where the Member has failed to comply with mandatory professional standards; and

– the Quality Review Department requires that a follow up review be conducted to ensure that the Member has rectified the issue(s) identified and ensured appropriate policies and procedures are in place to maintain compliance with professional standards.

• examples of findings when a Recommendation – “Follow-up review” would generally be appropriate are listed in the following pages with a follow up review. Usually in instances such as these, it is required that the Member undergoes a follow up review in approximately 12 months time. This will allow time for the areas of non-compliance to be adequately addressed. The reviewer will focus on the issue(s) identified and ensure appropriate policies and procedures are in place to maintain compliance with professional standards.

• where a Reviewer is unsure whether a Recommendation – “Follow-up review” is appropriate in a particular instance, the Quality Review Department should be contacted directly for an opinion.

• follow up review report should be accompanied by a Reviewer’s Summary – Matters Leading to Follow Up Recommendation and a Reviewer’s Summary – Other Matters report.

• the Reviewer’s Summary – Matters Leading to Follow Up Review report should detail the specific findings with regard

• to each instance of non-compliance identified and include specific recommendations as to how the Member can ensure compliance in each area.

• the review will only be considered complete on the successful outcome of the follow up review.


v v v v v

DIAGRAM 1 – TYPES OF REVIEW REPORT

REVIEW REPORTS

Member complies – No departures from mandatory standards noted

Inadequacies noted in member’s system of quality control or non compliance with

mandatory standards – very minor weaknesses

– no further submissions required from member

Inadequacies noted in member’s system of quality control or non compliance with mandatory standards

– minor weaknesses – requiring written

assurance from member that corrections will

be implemented

Inadequacies noted in member’s system of quality control or non-compliance with mandatory standards

– mild weaknesses – requiring evidence of

compliance and assurance of

implementation

Inadequate quality control system or

non-compliance with mandatory standards – Severe weaknesses – Follow up review

required

Requirements forCompliance

Representationof Compliance

Evidence ofCompliance

Follow Up Review


SYSTEM OF QUALITY CONTROL OF THE FIRM Please note:

• Reviewers must consider all aspects of the member’s system of quality control and its implementation, and may identify matters not addressed in these guidelines.

• When in doubt as to the type of report to issue in a particular set of circumstances, Reviewers are requested to contact the Quality Review Department directly to seek advice.

• Reviewers must consider the mandatory professional standards contained in APES 320, APES 110 and APES 325 when considering the findings listed below.

• The report type suggested in each instance below is the type that should be issued by a Reviewer in such an instance. The Quality Review Department will consider each recommendation and may change the type of report issued to a Member at its discretion.

• The Quality Review Department on considering the report prepared by the Reviewer in conjunction with the Member’s comments, may change the type of the report.

• Where the member does not have a Quality Control Manual, then the Member has 30 days to submit a Quality Control Manual to their reviewer.

EXAMPLE REVIEW FINDINGS (QC OF FIRM)

REPORT TYPE EXPLANATION – TO BE INCLUDED IN MEMBER’S QULITY REVIEW REPORT

1. The member has not established a system of quality control in accordance with the objective of APES 320. This refers to a system of quality control, which is more than the mere existence of a manual

(5) Follow Up Review

Non-compliance with APES 320.3

2. The member has not maintained a system of quality control in accordance with the objective of APES 320.

(4) Evidence of Compliance


APPLYING AND COMPLYING WITH APES320

3. The personnel responsible for establishing and maintaining the firm’s system of quality control does not understand the entire text of APES 320 or the objective and to apply its requirements properly.

(2) Requirements for compliance

(3) Representation for compliance

(4) Evidence for compliance


4. The member has not complied with each requirement of APES 320 unless irrelevant to the circumstances of the firm.



5. Where necessary the member did not establish policies and procedures in addition to those required by APES 320 to meet the stated objective.



ELEMENTS

6. The member did not establish and maintain a system of quality control that includes policies and procedures addressing each of the six elements of quality control.

(4) Evidence of

Compliance


7. The member has not documented its policies and procedures. (4) Evidence of

Compliance


LEADERSHIP RESPONSIBILITIES

8. There were no policies and/or procedures established to promote that quality is essential in performing engagements.



RELEVANT ETHICAL REQUIREMENTS

9. There were no policies and/or procedures to ensure the member and their staff are free of any self interest which might be regarded, whatever its actual effect, as being incompatible with integrity and objectivity.

(4) Evidence of

Compliance

Non-compliance with APES 320.19 / APES 320.20 and APES 110 Sections 110 / 120

10. There were no policies and/or procedures to ensure the member and their

staff adhere to professional competence and due care, confidentiality, and professional behaviour outlined in APES 110.


Non-compliance with APES 320.19 / APES 320.20 and APES 110 Sections 120 / 130 / 140

INDEPENDENCE

11. The member does not have policies and/or procedures designed to provide reasonable assurance that the practice maintains independence where required by relevant ethical requirements, which enables the member to communicate its independence requirements and identify and evaluate threats to independence and eliminate or reduce the threat or withdraw from the engagement.

(4) Evidence of

Compliance

Non-compliance with APES 110 / APES 320.24




ASSURANCE PRACTICE ONLY

12. The member did not evaluate the impact of client engagements, circumstances or relationships on independence requirements and the actions taken to reduce threats to an acceptable level.

(4) Evidence of

Compliance

Non compliance with APES 320.25

13. There are no policies and/or procedures that exist to notify the firm of breaches of independence requirements and to enable it to take appropriate actions to resolve such situations.

(4) Evidence of

Compliance


14. The member does not at least annually, obtain written confirmation of compliance with its policies and procedures on independence from all firm personnel required to be independent by relevant ethical requirements.

(4) Evidence of

Compliance


15. There were no safeguards applied when the firm uses the same senior personnel on assurance engagements over a long period of time.


Non compliance with APES 320.31(a)

16. For audits of listed entities, the firm did not rotate all individuals subject to rotation requirements in compliance with relevant ethical requirements.

(5) Follow Up Review Non compliance with

APES 320.31(b) and APES 110

APES 110 REQUIREMENTS

Self-Interest threat

17. Where a self interest threat has been identified, sufficient safeguards were not applied to ensure independence requirements are met.

(4) Evidence of

Compliance

Non compliance with APES 110:Section 290 and/or 291

Self-Review threat

18. Where a self review threat has been identified, sufficient safeguards were not applied to ensure independence requirements are met.

(4) Evidence of

Compliance


Advocacy threat

19. Where an advocacy threat has been identified, sufficient safeguards were not applied to ensure independence requirements are met.

(4) Evidence of

Compliance


Familiarity threat

20. Where a familiarity threat has been identified, sufficient safeguards were not applied to ensure independence requirements are met.

(4) Evidence of

Compliance


Intimidation threat

21. Where an intimidation threat has been identified, sufficient safeguards were not applied to ensure independence requirements are met.

(4) Evidence of

Compliance


AUDITS SUBJECT TO CORPORATIONS ACT 2001 (CTH) REQUIREMENTS

General requirements

22. Where a conflict of interest existed in relation to any of the members’ audit clients was not resolved within 7 days, the member did not inform ASIC of the conflict.

(3) Representation of Compliance or


Non Compliance with Corporations Act 2001: Sections 324CA; 324CB; 324CC; 324CD

Specific requirements

23. The member is, or has been:

• an officer or an audit-critical employee of any audit client

• a partner of; an employer of; an employee of; a partner or employee of an employee of; provided remuneration for acting as a consultant to; an officer of the audit client; or an audit-critical employee of the audit client

• an officer or audit-critical employee of the audit client at any time during:

– the period to which the audit relates; or

– the 12 months immediately preceding the beginning of the period to which the audit relates; or

– the period during which the audit is being conducted or the audit report is being prepared?

Note: These items do not apply if the audit client is a small proprietary company for the relevant financial year.



Non Compliance with Corporations Act 2001: Sections 324CE; 324CF; 324CG; 324CH




24. The member has or had:

• had an asset that is:

– an investment in the audit client

– a beneficial interest in an investment in the audit client and has control over that asset

– a beneficial interest in an investment in the audit client that is a material interest

– a beneficial interest in an investment in the audit client that is a material interest

– a material investment in an entity that has a controlling interest in the audit client; or

– a material beneficial interest in an investment in an entity that has a controlling interest in the audit client

• owed an amount to; owed an amount by; is liable under a guarantee of a loan made to; is entitled to the benefit of a guarantee given by:

a. the audit client; or

b. a related body corporate; or

c. an entity that the audit client controls

(4) Evidence for compliance

Non Compliance with Corporations Act 2001: Sections 324CE; 324CF; 324CG; 324CH

CLIENT RELATIONSHIPS & ENGAGEMENTS

25. With regards to accepting and continuing client relationships and specific engagements, the member has not ensured that the firm and relevant staff:

a. is competent and capable (4) Evidence of

Compliance Non compliance with APES 320.38(a)

b. complies with relevant ethical requirements (4) Evidence of

Compliance Non compliance with APES 320.38(b)

c. appropriately assesses the integrity of the client (4) Evidence of

Compliance Non compliance with APES 320.38(c)

d. obtain the necessary information before accepting an engagement with a new client, when deciding whether to continue an existing engagement and when considering acceptance of new engagement with an existing client

(4) Evidence of

Compliance

Non compliance with APES 320.42(a)




26. The firm has not issued an engagement document that includes:

a. an introduction explaining that the purpose of the engagement document is to confirm the member’s understanding of the terms of the engagement

b. the purpose of the engagement

c. the scope of the engagement, including the period of appointment and time schedules, the applicability of any legislation and professional standards relevant to the engagement, information required of the client or any other pertinent matter

d. for taxation engagements informing clients of the self-assessment rules, their responsibilities and the penalties of any tax shortfall, that the client is responsible for the accuracy and completeness of the particulars and information provided by the client, that any advice given to the client is only an opinion based on the knowledge of the client’s particular circumstances and that a taxpayer has obligations under self assessment to keep full and proper records in order to facilitate the preparation of accurate returns.

e. for compilation engagements a reference to an appropriate disclaimer of liability and the limitations of the engagement

f. if applicable, the form of report you will issue

g. for audit engagements, the audit’s scope and objective of the audit and an explanation as to the extent to which an audit can be relied on to detect material misstatements

h. the request for the client to confirm the terms of the engagement by acknowledging receipt of the engagement document.


Non compliance with APES 305 for non-audit engagements and APES 210 for audit engagements

27. The member does not have policies and/or procedures that deal with potential conflicts of interest that have been identified prior to, or during, and engagement.

(4) Evidence of

Compliance

Non compliance with APES 320.42(b) and (c) and APES 110 Section 220

28. There are no policies and/or procedures in how to deal with situations where new information at hand would have caused the firm to decline an engagement.

(4) Evidence of

Compliance


29. There are no policies and/or procedures in how to provide a second opinion on behalf of a company or an entity that is not an existing client.


Non compliance with APES 110 Section 230

HUMAN RESOURCES 30. The firm does not ensure it has sufficient personnel with the competence,

capabilities and commitment to ethical principles.

(2) Requirements for compliance or

(3) Representation of compliance or



31. The member has not complied with the Continuing Professional Development requirements, consisting of a minimum of 20 hours per year with at least 120 hours per triennium.

(2) Requirements

for compliance

Non compliance with CPA Australia By-Law 4.1

32. Where the member audits SMSF’s and have not complied with the minimum 30hrs of relevant professional development activity per triennium with a minimum from each of the following categories:

• 8 hrs of superannuation training

• 8 hrs of financial statement or compliance audit training

• 4 hrs financial accounting training.

(3) Representation of

compliance

Non compliance with the SMSF competency requirements

33. The member did not maintain Continuing Professional Development records.


Non-compliance with CPA Australia By-Law 4.2




ENGAGEMENT PERFORMANCE

34. There are no policies and procedures to help ensure that engagements are performed in accordance with professional standards and applicable legal and regulatory requirements, and that the firm or the engagement partner issue reports that are appropriate in the circumstances.

(4) Evidence of

Compliance


CONSULTATION

35. The firm does not have policies and/or procedures designed to ensure appropriate consultation takes place, with either internal or external professionals possessing the relevant expertise, to resolve difficult or contentious matters including to:

• appropriate consultation takes place on difficult or contentious matters

• sufficient resources are available to enable appropriate consultation to take place

• document and agree conclusions (Assurance Practices only); and

• document reasons why alternative courses of action were undertaken; (Assurance practices only)

• implement conclusions.

(4) Evidence of

Compliance


36. The member does not readily have available access to the Members’ Handbook within the firm.


CPA Australia By-Laws

37. There are no standard checklists, manuals, working papers and/or other appropriate methods used for client engagements to ensure consistency in the quality of each engagement performance and to provide guidance to new or junior staff.

(4) Evidence of

Compliance


ASSURANCE PRACTICES ONLY

ENGAGEMENT QUALITY CONTROL REVIEW

38. Engagement quality control reviews (i.e. second partner reviews) are not conducted for appropriate engagements in order to meet the requirements of APES 320.

(3) Representation

of compliance

Non compliance with APES 320.70, 72, 73, 77, 88

39. The firm has not establish the eligibility and/or maintained the objectivity, of engagement quality control reviewers.

(3) Representation of compliance

Non compliance with APES 320.80, 83, 87

DIFFERENCES OF OPINION

40. The firm does not have a policy and/or procedure on how to deal with and resolve differences of opinion regarding the performance and outcomes of an engagement.

(4) Evidence of

Compliance

Non-compliance with APES 320.89, 90

ENGAGEMENT DOCUMENTATION

41. There are no policies and/or procedures regarding how to:

a. complete the assembly of final engagement files on a timely basis. (4) Evidence of Compliance


b. maintain the confidentiality, safe custody, integrity, accessibility and retrievability of engagement documentation.



c. retain engagement documentation for a period sufficient to meet the needs of the firm or as required by law or regulation.



42. The requirements of the Privacy Act are not being addressed in files. (4) Evidence of

Compliance

Privacy Act

43. File-notes are not maintained to document issues which are not addressed in the standard working papers.

Other Matters in Review Report

44. Carry-forward working papers are not maintained. Other Matters

in Review Report

45. There are no policies and/or procedures to ensure the tax lodgement process is adequately monitored.


46. There are no procedures in place to avoid the submission of misleading or incorrect information to the authorities or to the client.





MONITORING

47. The member does not regularly monitor the firm’s quality control policies and procedures to ensure they are relevant, adequate, and operating effectively.

(3) Representation

of compliance


48. The personnel responsible for monitoring the firm’s quality control policies and procedures do not possess sufficient and appropriate experience and authority.

(3) Representation

of compliance

Non-compliance with APES 320.106(b)

49. The monitoring process does not consider issues such as new developments in professional, regulatory and legal standards, continuing professional development, issues concerned with the acceptance and continuance of client relationships, plus any other appropriate items.

(3) Representation

of compliance


ASSURANCE PRACTICES ONLY 50. The firm does not evaluate the effect of, communicate and remedy

deficiencies noted as a result of the monitoring process.

(4) Evidence of

Compliance

Non-compliance with APES 320.112, 320.113, 320.115, 320.116, 320.117, 320.118

COMPLAINTS AND ALLEGATIONS

51. Policies and/or procedures do not exist to appropriately deal with complaints and allegations regarding performance of engagements and/or non-compliance with the quality control system.

(4) Evidence of

Compliance

Non-compliance with APES 320.119, 320.122

DOCUMENTATION

52. There are no formally documented quality control policies and procedures that:

a. provide evidence of the operation of each element of the system of quality control.



b. require retention of documentation for sufficient time periods to allow monitoring of performance and compliance with the system of quality control.

(4) Evidence of

Compliance


c. require documentation of complaints and allegations and the responses to them.



MARKETING

53. The firm’s marketing is not honest and truthful and:

a. Makes exaggerated claims for services offered, qualifications possessed, or experience gained; and/or

b. Makes disparaging references or unsubstantiated comparisons to the work of another.

(4) Evidence of

Compliance


RISK MANAGEMENT FRAMEWORK

54. The firm has not established a risk management framework.

55. The firm has not documented their risk management policies and procedures and there is no evidence these have been communicated to firm’s personnel (where applicable).

56. The firm has not included in their risk management framework policies and procedures that identify, assess and manage key organisational risks.

57. Where applicable the firm has not identified who is responsible for establishing and maintaining the risk management framework stating how they have the necessary skills, experience, commitment and authority.

58. The firm does not have evaluation policies and procedures that assess the firm’s monitoring process of it’s risk management framework.

(4) Evidence of

Compliance

Non-compliance with APES 325

FOR MEMBERS WHO EMPLOY STAFF

59. The firm did not communicated the policies and procedures relating to quality control to the firm’s personnel.



LEADERSHIP RESPONSIBILITY

60. The CEO / managing board of partners (or equivalent) do not understand that they have ultimate responsibility for the quality control system.



61. Policies and/or procedures do not exist to ensure that operational responsibility for the system of quality control has been appropriately assigned.

(4) Evidence of

Compliance





ASSIGNMENT OF ENGAGEMENT TEAM

62. The firm does not adequately communicate the engagement partner’s identity and role to the client.


Non-compliance with APES 320.54(a)

63. The firm does not ensure engagement partners understands their responsibilities, and possesses the appropriate capabilities, competence and authority to perform the role.

(2) Requirements

for compliance

Non-compliance with APES 320.54(b) and (c)

64. There are no policies and procedures implemented to ensure all personnel assigned to an engagement possess the necessary competence and capabilities to perform each engagement.

(4) Evidence of

Compliance


65. The personnel requirements are not reviewed and/or documented. Other Matters in

Reviewer Report

66. Job descriptions do not exist and are not considered when hiring additional staff.

Other Matters in Reviewer Report

67. References of all prospective employees are not checked. Other Matters in

Reviewer Report

68. Formal personnel files are not maintained. Other Matters in

Reviewer Report

69. Regular staff appraisals are not conducted. Other Matters in

Reviewer Report

70. Where regular staff appraisals are conducted performance criteria are not established for each role.

Other Matters in Reviewer Report


DEALING WITH CLIENT MONIES Please note:

• Reviewers must consider all aspects of the Member’s system of quality control and its implementation, and may identify matters not addressed in these guidelines.


• Professional services provided in connection with dealing with client monies must be considered in light of the mandatory professional standards contained in APES 310, which is effective from 1 July 2011.



• There is a separate section of this report which deals with the Member’s compliance with APES 320, and all applicable questions are in that section.

EXAMPLE REVIEW FINDINGS (DEALING WITH CLIENT MONIES)


1. For each of the relevant areas below the member has not documented policies and procedures in place to ensure compliance with the applicable requirements.

(4) Evidence of

Compliance


2. Where the member:

• receives client monies as per the definitions of APES 310 but does not operate a trust account; and/or

• deals with client monies as per the definitions of APES 310 either through their own trust account or the account of their client; and did not appoint and absorb the cost of a member in public practice to audit their compliance with APES 310 within 3 months of the most recent applicable year end or in accordance with other legislative requirements.

Note, that if the review is conducted between the applicable year end date and when the audit report is required to be issued, the reviewer must sight the previous audit report and have the member sign the “Declaration of intended compliance with audit requirement under APES 310”, which is attached to the Dealing with Client Monies Questionnaire.

(4) Evidence of

Compliance

Non-compliance with APES 310.3-8

AUDITING A MEMBER’S COMPLIANCE WITH APES 310

3. The member did not perform the audit of client monies in accordance with auditing and assurance standards.

(5) Follow up Review

Non-compliance with APES 310.9.1-2 and relevant auditing and assurance standards

4. The member did not comply with Section 291 ‘Independence

– Other Assurance Engagements’.

(4) Evidence of Compliance or


Non compliance with APES 310.9.4 and APES 110.9.1

5. The member completed an audit where a reasonable and informed person would determine that the independence of the member was impaired as a result of a past, existing or proposed relationship.



Non-compliance with APES 310.9.5

6. The member did not report any deficiency of client monies to the member’s

professional body within five days of becoming aware of the deficiency.

(4) Evidence of

Compliance


7. The member has not reported to the member’s professional body with 10 business days of becoming aware of:

a. a material failure to comply with APES310.6.1 or APES 310.6.9; or

b. an uncorrected error reflected in statement issued by a financial institution; and/or

c. circumstances where client monies have not been transacted or maintained in accordance with APES 310.



8. Subject to legislative requirements, the member did not retain relevant working papers for at least 7 years.

(3) Representation of Compliance


9. If the member resigned from the position of auditor of client monies, they did not first obtain the written approval of the applicable professional body.




COMPILATION ENGAGEMENTS Please note:



• Compilation engagements must be considered in light of the mandatory professional standards contained in APES 205 and APES 315.



• There is a separate questionnaire which deals with the Member’s compliance with APES 320, and all applicable questions are in that section of the questionnaire.

EXAMPLE REVIEW FINDINGS (COMPILATION)



(4) Evidence of

Compliance


2. Member has not documented and communicated the terms of engagement when providing professional services to clients.


Non-compliance with APES 305.3.1 and APES 315.6.1

3. Work not planned so that the engagement would be performed in accordance with applicable professional standards, laws and regulations.



4. GPFR (General Purpose Financial Report) – Member has not ensured that any departure from Australian Accounting Standards, the reasons for such departure and its financial effects are properly disclosed and explained in the GPFR.

(3) Representation

of Compliance


5. SPFR (Special Purpose Financial Report) – it appears reasonable to expect that the SPFR will not be used solely for internal purposes, and the member has not taken reasonable steps to ensure that the SPFR and compilation report clearly states that it is a SPFR, the specific purpose for which it has been prepared and the extent to which significant accounting policies have, or have not, been adopted.

(4) Evidence of

Compliance


6. Member was of the view that the Applicable Financial Reporting Framework selected by a Client was not appropriate and the Client was not willing to adopt an appropriate framework, and the Member didn’t consider the Firm’s policies and procedures established in accordance with Acceptance and Continuance of Client Relationships and Specific Engagements of APES 320 Quality Control for Firms to determine whether to continue acting for the Client in a professional capacity.

(4) Evidence of

Compliance


7. Member assisted their client with significant judgements regarding amounts or disclosures and didn’t discus those judgements with the client and those charged with governance to ensure their understanding and acceptance of their responsibility.

(3) Representation

of Compliance


8. Member has not assessed whether the compiled financial information is appropriate in form and content and free from misstatements.



9. Member has not performed additional procedures and requested the client to provide additional information where information supplied by the client was believed to be materially false or misleading, or where material information had been omitted.

(4) Evidence of

Compliance


10. Member has not prepared working papers that appropriately document the work performed.

(5) Follow Up review


11. Member has not performed sufficient reviews of the compilation engagement prior to issuing the report



12. Member has not obtained client acknowledgement that the client is responsible for the reliability, accuracy and completeness of the accounting records and the disclosure to the member of all material and relevant information.

(4) Evidence of

Compliance


13. Member has not issued a compilation report where required and has not documented the rationale for that decision.


Non-compliance with APES 315.10.2 & APES 315.10.4


EXAMPLE REVIEW FINDINGS (COMPILATION)


14. Member has issued a compilation report in relation to Financial Statements prepared in accordance with a regulation or contract and the member hasn’t described in the Compilation Report the purpose for which the Financial Statements are prepared or referred to a note in the Financial Statements that contains that information.

(4) Evidence of

Compliance

Non compliance with APES 315.10.7

15. Compilation report issued doesn’t contain all required elements. (4) Evidence of

Compliance


16. Compilation report issued by member does not include a reference such as “Unaudited”, “Compiled without Audit or



17. Member has not communicated significant matters to those charged with governance on a timely basis.



18. Member has not communicated information indicating a material fraud, material misstatement or illegal act to those charged with governance as soon as practicable.


Compliance


19. Member has not considered the impact of a subsequent discovery of facts and/or discussed the matter with the client and taken appropriate action.



20. No evidence that the Member, upon discovering subsequent facts and revising the compiled financial information, took all the necessary steps to inform anyone who received the previous issued Compiled financial information of the issue.


Compliance



TAXATION ENGAGEMENTS Please note:



• Taxation engagements must be considered in light of the mandatory professional standards contained in APES 220.

• The report type suggested in each instance below is the type that should generally be issued by a Reviewer in such an instance.

• The Quality Review Department will consider each recommendation and may change the type of report issued to a Member at its discretion.

• Reviewers are to use their judgment in deciding whether to issue a Follow Up Review Report. Where there is an isolated incident, a Follow Up Review Report may not be required however where a number of breaches have been identified it may be necessary to issue a Follow Up Review.



EXAMPLE REVIEW FINDINGS (TAXATION)



(4) Evidence of

Compliance


2. Member has not documented and communicated the terms of engagement when providing professional services to clients.



3. Member has not advised the client of their rights, obligations and options under the taxation law, including private rulings, objections and appeals.


Non-compliance with APES 220.3.14(a)

4. Member hasn’t advised the client on the application of taxation law, including any possible penalties and other legal tax consequences, so as to allow them to make an informed decision on the course of action.

(4) Evidence of

Compliance

Non-compliance with APES 220.3.14(b)

5. Member has not advised the client in writing that responsibility for the accuracy and completeness of the particulars and information provided by the client rests with the client.

(4) Evidence of

Compliance

Non-compliance with APES 220.3.15(a)

6. Member has not advised the client in writing that any advice given to the client is only an opinion based on the member’s knowledge of the client’s particular circumstances.

(4) Evidence of

Compliance

Non-compliance with APES 220.3.15(b)

7. Member has not advised the client in writing that a taxpayer has obligations under self assessment to keep full and proper records in order to facilitate the preparation of accurate returns.

(4) Evidence of

Compliance

Non-compliance with APES 220.3.15(c)

8. Member has not submitted all required lodgements in accordance with the information provided by the client, their instructions, and the relevant taxation law.




9. Member has not ensured that clients are fully informed of the details of any tax schemes or arrangements and their current and future ramifications, including risks and uncertainties.



10. Member has been knowingly or recklessly associated with an arrangement which involved documents or accounting entries intended to misrepresent a transaction or which depended upon lack of disclosure for its effectiveness.



11. Member has promoted or assisted in the promotion of a tax scheme or arrangement where the dominant purpose is to derive a tax benefit that is not reasonably arguable.



12. Member has a financial interest in an entity that predominantly promotes tax schemes or arrangements or has provided professional services to such an organisation in which an immediate or close family has a financial interest.



13. Member has prepared or been associated with the preparation of returns or submissions involving the use of estimates when their use was not generally acceptable or where exact data could have been obtained.



14. Member provided a taxation service to a client where the member had found that material on which the taxation service was based contained false or misleading information or omitted material information.




EXAMPLE REVIEW FINDINGS (TAXATION)


15. Member has not obtained the consent of a third party that has provided opinions or advice in connection with the performance of a taxation service, prior to disclosing such information.


Compliance


16. Member has not ensured prompt transmission of monies received to the client. (4) Evidence of

Compliance


17. Member used, withheld or otherwise appropriated tax refunds to settle the fees of the member or for any other use in lieu of their transfer directly to the client without the clients agreement in writing.

(4) Evidence of

Compliance


18. Member did not use a separate bank account designated as a trust account and maintained in accordance with the requirements of the professional body to which the member belongs.

(4) Evidence of

Compliance


19. Member did not prepare working paper files in accordance with APES 220 Taxation Services that appropriately documented the work performed.




CORPORATE SECRETARIAL ENGAGEMENTS Please note:



• Corporate secretarial engagements must be considered in light of the requirements of the Corporations Act 2001 (Cwlth). As there have been a number of legislative changes, Reviewers should consult the Act to determine the requirements when reviewing this work.


• The reviewer should use their professional judgement in certain circumstances and vary the types of report recommended below where they have evidence that further assurance is required to ensure that the member is complying with the required regulations.

• The Quality Review Department on considering the report prepared by the Reviewer in conjunction with the Member’s comments, may change the type of the report

• The report to the member should include the relevant parts of the legislation as well as the consequences of the breach.


EXAMPLE REVIEW FINDINGS (CORPORATE SECRETARIAL)


1. Member has not documented and communicated the terms of engagement, clearly outlining matters such as the purpose, objectives, scope, output and relative responsibilities, of the engagement performed by the member to clients in an engagement document.



2. There is no documentary evidence to support the member as having performed the engagement in accordance with the terms of engagement.



3. The member has been engaged to lodge the annual reports on behalf of the client and there is evidence on file to demonstrate that these were not lodged within the required time frame.


Non-compliance with APES 110.130.4 Client is in breach of s.319

4. The member has been engaged to assist in the preparation of the Annual Statement and Solvency Resolutions and there is evidence on file that the client did not understand nor agree on what was being provided to them and that the required documentation was not provided to the client to allow them to meet the applicable lodgment timeframes.



5. The member has been engaged to assist in responding to an extract of particulars that was received which included a requirement to provide a particular under s.346B, using Form 484, and there is evidence that this was not lodged within the required timeframe.


Non-compliance with APES 110.130.4 Client is in breach of s.346C

6. The member has agreed to lodged the prescribed form on behalf of the clients, in the instance where a negative resolution under s.347A was passed by the client, and there is evidence it was not lodged within the required time frame.


Non-compliance with APES 110.130.4 Client is in breach of s.347B(1)

7. There is evidence that the member, in the instance where a solvency resolution wasn’t passed by the client within the 2 months of the review date, did not lodge the prescribed form within the required timeframe where they have agreed to do so on behalf of the client.


Non-compliance with APES 110.130.4 Client is in breach of s.347B(2)

8. Where the member maintains the client’s statutory registers, is there evidence the member complies with the following requirements of the Corporation Act 2001: a. Keeps the register of members;

b. Maintains the register of option holders and copies of options documents, if applicable;

c. Maintains the register of debenture holders, if applicable.



Client is in breach of s.169 Client is in breach of s.170

Client is in breach of s.171

9. The member has been engaged to maintain copies of the consents to act as director/secretary of the company and there is no evidence, or not enough evidence, of the appropriate documentation on file.


Non-compliance with APES 110.130.4 Client is in breach of s.201D(2) or s.204C(2)

10. The member has agreed to keep and maintain the minutes book on behalf of the client and there is evidence that it has not been updated within the required timeframe.


Non-compliance with APES 110.130.4 Client is in breach of s.251A


EXAMPLE REVIEW FINDINGS (CORPORATE SECRETARIAL)


11. The member or the member’s firm is the registered office of a public company and the member or the member’s firm have not prominently displayed a sign reflecting such.


Non-compliance with APES 110.130.4 Client is in breach of s.144(2)

12. It does not appear that all relevant documents have been lodged in the prescribed time with ASIC (and ASX if appropriate)?



13. There is evidence that the member does not have written records/copies of the client’s instructions for periods sufficient to meet the needs of the Firm and the client as required by law or regulation.

(3) Follow Up Review Non-compliance with APES 320.101


AUDIT ENGAGEMENTS Please note:



• Audit engagements must be considered in light of the mandatory auditing standards contained in the ASA series for Australian members and ISA series for New Zealand members.


• The Quality Review Department on considering the report prepared by the Reviewer in conjunction with the Member’s comments may change the type of the report.

• There is a separate section of this report which deals with the Member’s compliance with APES 320 or PES 3, and all applicable questions are in that section.

EXAMPLE REVIEW FINDINGS (AUDIT)


QUALITY CONTROL

1. Member has not member established and maintained a system of quality control in accordance with these standards.


Non-compliance with ASQC1 and APES 320, or PES 3

INDEPENDENCE AND OTHER ETHICAL REQUIREMENTS

2. The member, as the auditor, has not complied with the relevant ethical requirements, including those pertaining to independence, when performing audits engagements.

(5) Follow Up Review Non-compliance with ASA 102.5, ASA 200.14 and APES 110.290 ISA (NZ) 200.14 and PES 1.290

3. The member has not included the following in their audit documentation: a. issues identified with respect to compliance with relevant ethical

requirements and how they were resolved?

b. conclusions on compliance with independence requirements that apply to the audit engagement, and any relevant discussions with the firm that support these conclusions?.

(5) Follow Up Review Non-compliance with ASA 220.24a-b ISA (NZ) 220.24a-b

4. Australia: In the case of entities audited in accordance with the Corporations Act 2001, the member has not communicated with those charged with governance through a statement that the engagement team and others in the firm as appropriate, the firm, and, when applicable network firms, have complied with the independence requirements of section 307C of the Corporations Act 2001.

(5) Follow Up Review Non-compliance with ASA 260.Aus17.1

5. New Zealand: In the case of FMC reporting entities considered to have a higher level of public accountability, the member has not communicated with those charged with governance a statement that the engagement team and others in the firm as appropriate, the firm, and, when applicable, network firms have complied with relevant ethical requirements regarding independence.

(3) Representation of Compliance or (5) Follow Up Review (depending if company is publicy listed)

Non-compliance with ISA (NZ) 260.NZ17.1

ACCEPTANCE AND CONTINUANCE PROCEDURES

ACCEPTANCE AND CONTINUANCE PROCEDURES: PRECONDITIONS FOR THE AUDIT

6. The member has not performed the followings procedures in order to establish the preconditions for an audit:

a. determined whether the financial reporting framework to be applied in the preparation of the financial report is acceptable;

b. obtained the agreement of management/those charged with governance that they acknowledge and understand their responsibility.

(3) Representation of Compliance or (4) Evidence of Compliance

Non-compliance with ASA 210.6 ISA (NZ) 210.NZ6.1

7. The member had other person(s) undertaking work on their behalf and they did not ensure the person(s) had appropriate competence and capabilities to perform the audit engagement in accordance with Australian Auditing Standards or International Standard on Auditing (New Zealand), relevant ethical requirements, professional standards and applicable legal and regulatory requirements.

(5) Follow Up Review Non-compliance with ASA 220.14(a) ISA (NZ) 220.14(a)




ACCEPTANCE AND CONTINUANCE PROCEDURES: TERMS OF ENGAGEMENTS

8. The member has not agreed the terms of the audit engagement with management or those charged with governance in an audit engagement letter or other suitable form of written agreement.


Non-compliance with ASA 210.10 ISA (NZ) 210.NZ9.1-NZ10.1

9. One or more of the following factors has not been included in the audit engagement letter: a. The objective and scope of the audit of the financial report; b. The responsibilities of the auditor; c. The responsibilities of management/those charged with

governance;

d. Identification of the applicable financial reporting framework for the preparation of the financial report;

e. Reference to the expected form and content of any reports to be issued by the auditor and a statement that there may be circumstances in which a report may differ from its expected form and content.

f. A statement that there may be circumstances in which a report may differ from its expected form and content (New Zealand Members Only).


Non-compliance with ASA 210.9-10 ISA (NZ) 210.NZ10.1

10. For recurring audits, the member has not assessed whether circumstances required the terms of the audit engagement to be revised and whether there was a need to remind the client of the existing terms of the audit engagement.


Non-compliance with ASA 210.13 ISA (NZ) 210.13

11. The member has not communicated with those charged with governance, the responsibilities of the auditor in relation to the financial report audit.



12. The member has not included in the audit documentation, conclusions reached regarding the acceptance and continuance of client relationships and audit engagements.

(5) Follow Up Review Non-compliance with ASA 220.24(c) ISA (NZ) 220.24(c)

AUDIT PLAN AND PROCEDURES

13. The audit file did not contain an audit strategy and/or audit plan. (5) Follow Up Review Non-compliance with Audit Plan Audit Strategy ASA 300.7-8 ASA 300.9 ISA (NZ) 300.7-8 ISA (NZ) 300.9

14. The member has not planned the nature, timing, and extent of direction and supervision of engagement team members and the review of their work.

(5) Follow Up Review Non-compliance with ASA 300.11 ISA (NZ) 300.11

15. The member has not communicated with those charged with governance an overview of the planned scope and timing of the audit.



AUDIT PLAN AND PROCEDURES: INITIAL AUDIT ENGAGEMENT

16. The member has not communicated with the predecessor auditor, in compliance with relevant ethical requirements.

(5) Follow Up Review Non-compliance with ASA 300.13(b) ISA (NZ) 300.13(b)

17. The member has not obtained sufficient appropriate audit evidence about whether the opening balances contain misstatement that materially affect the current period’s financial report.


18. The member was unable to obtain sufficient appropriate audit evidence regarding the opening balances, and they did not express a qualified opinion or disclaimed an opinion on the financial report.


AUDIT PLAN AND PROCEDURES: UNDERSTANDING THE CLIENT AND RISK ASSESSMENT

19. The member has not obtained the required understanding of the entity and its environment, including the Entity’s internal control.

(5) Follow Up Review Non-compliance with ASA 315.11-12 ISA (NZ) 315.11-12

20. The member has not identified and assessed the risks of material misstatement at: a. the financial report level; and

b. the assertion level for classes of transactions, account balances and disclosures to provide a basis for designing and performing further audit procedures.





21. The member has not included in the audit documentation, the understanding and risk assessment, as referred to in questions 17 and 18 of the Audit Engagement Questionnaire, respectively.


22. The member has not performed one or more of the following procedures to obtain information for use in identifying and assessing the risk of material misstatement due to fraud: a. make enquiries of the management and others within the entity;

b. make enquires of those charged with governance where not all of them are involved in the management of the entity;

c. evaluate whether unusual or unexpected relationships that have been identified may indicate risks of material misstatement due to fraud;

d. consider whether other information obtained indicates risks of material misstatement due to fraud; and

e. evaluate whether the information obtained from the other risk assessment procedures and related activities performed indicates that one or more fraud risk factors are present.

(5) Follow Up Review Non-compliance with

ASA 240.17-19 / ISA (NZ) 240.17-19 ASA 240.20-21 / ISA (NZ) 240.20-21 ASA 240.22 / ISA (NZ) 240.22 ASA 240.23 / ISA (NZ) 240.23 ASA 240.24 / ISA (NZ) 240.24

23. When documenting the understanding of the entity and its environment and the assessment of the risks of material misstatement, the member did not include the following:

a. the significant decisions reached during the discussion among the engagement team regarding the susceptibility of the entity’s financial report to material misstatement due to fraud; and

b. the identified and assessed risks of material misstatement due to fraud at the financial report level and at assertion level.


24. The member used information obtained from previous experience with the entity and from previous audits, and did not determine whether changes had occurred since the previous audits that might affect its relevance to the current audit.



25. The member has not obtained a general understanding of the legal and regulatory framework applicable to the entity and the industry or sector in which the entity operates, nor how the entity is complying with that framework.


26. The member has not designed and performed audit procedures in order to identify litigation and claims involving the entity which may give risk to a risk of material misstatement.


27. The member suspected that there may be non-compliance with laws and regulation and did not:

a. discuss the matter with management and where appropriate, those charged with governance;

b. receive sufficient information to support the entity’s compliance, or evaluate the effect of the lack of sufficient appropriate audit evidence on the member’s opinion; nor

c. evaluate the implications of non-compliance in relation to other aspects of the audit and take appropriate action.

(4) Evidence of Compliance or (5) Follow Up Review (depending on the impact of the non- compliance )

Non-compliance with ASA 250.19-21 ISA (NZ) 250.19-21

28. The member has not included in the audit documentation, the identified or suspected non-compliance with laws and regulations and the results of discussion with management and, where applicable, those charged with governance and other parties outside the entity.


29. The member has not, as part of the risk assessment procedures, performed the relevant audit procedures to obtain information relevant to identifying the risks of material misstatement associated with related party relationships and transactions.


30. The member has not included in the audit documentation, the names of the identified related parties and the nature of the related party relationship.





31. The member has not, as part of the risk assessment procedures, obtained an understanding of the following in order to provide a basis for the identification and assessment of the risks of material misstatement for accounting estimates:

a. the requirements of the applicable financial reporting framework relevant to accounting estimates, including related disclosures;

b. how management identified those transactions, events, and conditions that may have given rise to the need for accounting estimate to be recognized or disclosed in the financial report; and

c. how management made the accounting estimates and an understanding of the data on which they are based.


32. The member has not, as part of the risk assessment procedures, considered whether events or conditions existed that may have cast significant doubt on the entity’s ability to continue as a going concern and determined whether management has already performed a preliminary assessment of the entity’s ability to continue as a going concern.


AUDIT PLAN AND PROCEDURES: AUDITOR’S RESPONSES TO THE ASSESSED RISKS

33. The member has not designed and implemented overall responses to address the assessed risks of material misstatement at the financial report level.


34. The member has not designed and performed further audit procedures, including substantive procedures, whose nature, timing, and extent are based on and are responsive to the assessed risks of material misstatement at the assertion level.

(5) Follow Up Review Non-compliance with ASA 330.6, ASA 330.18 and ASA 520.5 ISA (NZ) 330.6, ISA (NZ) 330.18 and ISA (NZ) 520.5

35. The member has not included in the audit documentation: a. The overall responses to address the assessed risk of material

misstatement at the financial report level, and the nature, timing, and extent of the further audit procedures performed;

b. The linkage of those procedures with the assessed risk at the assertion level; and

c. The results of the audit procedures, including the conclusions where there are not otherwise clear.


36. The member has not included the following in the audit documentation: a. the overall responses to the assessed risks of material misstatement

due to fraud at the financial report level and at the assertion level;

b. the results of the audit procedures, including those designed to address the risks of management of override of controls;

c. communication about fraud made to management, those charged with governance, regulators, and others; and

d. conclusion about the presumption that there is a risk of material misstatement due to fraud related to revenue recognition is not applicable in the circumstances of the engagement, and included the reasons for that conclusion.

(5) Follow Up Review Non-compliance with ASA 240.45(a) ISA (NZ) 240.45(a) ASA 240.45(b) ISA (NZ) 240.45(b) ASA 240.46 ISA (NZ) 240.26 ASA 240.47 ISA (NZ) 240.47

37. The member planned to use the audit evidence from a previous audit about the operating effectiveness of specific controls, and had not established the continuing relevance of that evidence by obtaining audit evidence about whether significant changes in those controls have occurred subsequent to the previous audit and documented the conclusion reached about relying on such controls.

(5) Follow Up Review Non-compliance with ASA 330.14 and ASA 330.29 ISA (NZ) 330.14 and ISA (NZ) 330.29

38. The member planned to rely on controls over a risk the member determined to be a significant risk and they did not test those controls in the current period nor evaluated the operating effectiveness of those controls.


39. The member’s substantive procedures did not include the following audit procedures related to the financial report closing process:

a. agreeing or reconciling the financial report with the underlying accounting records; and

b. examining material journal entries and other adjustments made during the course of preparing the financial report.

(5) Follow Up Review Non-compliance with ASA 330.20 and ASA 330.30 ISA (NZ) 330.20 and ISA (NZ) 330.30

40. The member has not considered whether external confirmation procedures were to be performed as substantive audit procedures.





AUDIT PLAN AND PROCEDURES: MATERIALITY

41. The member has not determined materiality for the financial report as a whole (overall materiality) and, if applicable, the materiality level or levels for particular classes of transactions, account balances, or disclosure.


42. The member has not determined performance materiality. (5) Follow Up Review Non-compliance with ASA 320.11 ISA (NZ) 320.11

43. The member has not included in the audit documentation, the following amounts and factors considered in their determination: a. Materiality for the financial report as a whole;

b. If applicable, the materiality level or levels for particular classes of transactions, account balances, or disclosure;

c. Performance materiality; and d. Any revision of (a)-(c) as the audit progressed.


AUDIT PLAN AND PROCEDURES: AUDIT SAMPLING AND AUDIT EVIDENCE

44. When designing and performing audit procedures, the member has not considered the relevance and reliability of the information to be used as audit evidence.


45. The information used as audit evidence had been prepared using the work of a management’s expert, and the member, having regard to the significance of that expert’s work for the audit purposes did not: a. Evaluate the competence, capabilities, and objectivity of that expert; b. Obtain an understanding of the work of that expert; and

c. Evaluate the appropriateness of that expert’s work as audit evidence for the relevant assertion.


46. When designing tests of controls and tests of details, the member did not determine means of selecting items for testing that were effective in meeting the purpose of the audit procedure.


47. When designing an audit sample, the member did not: a. consider the purpose of the audit procedure and the characteristics of

the population from which the sample will be drawn;

b. determine a sample size sufficient to reduce sampling risk to an acceptably low level; and

c. select items for the sample in such a way that each sampling unit in the population has a chance of selection.

(5) Follow Up Review Non-compliance with ASA 530.6 ISA (NZ) 530.6 ASA 530.7 ISA (NZ) 530.7 ASA 530.8 ISA (NZ) 530.8

48. The member has not obtained sufficient appropriate audit evidence to reduce audit risk to an acceptably low level and thereby enable the member to draw reasonable conclusions on which to base their opinion.


AUDIT PLAN AND PROCEDURES: ACCOUNTING ESTIMATES

49. The member identified accounting estimates as having high estimation uncertainty, and they did not determine the appropriate responses to address the risk of material misstatement associated with accounting estimates.


50. The member has not included in their audit documentation: a. the basis for the member’s conclusions about the reasonableness of

accounting estimates and their disclosure that give rise to significant risks; nor

b. indicators of possible management bias, if any.


AUDIT PLAN AND PROCEDURES: AUDIT DOCUMENTATION

51. The member has not prepared audit documentation on a timely basis. (5) Follow Up Review Non-compliance with ASA 230.7 ISA (NZ) 230.7




52. The member has not prepared audit documentation that is sufficient to enable an experienced auditor, having no previous connection with the audit, to understand:

a. The nature, timing, and extent of the audit procedures performed to comply with the Australian Auditing Standards and applicable legal and regulatory requirements;

b. The results of the audit procedures performed, and the audit evidence obtained; and

c. Significant matters arising during the audit, the conclusions reached thereon, and significant professional judgements made in reaching those conclusions.


53. In documenting the nature, timing, and extent of audit procedures performed, the member has not recorded: a. the identifying characteristics of the specific items or matters tested;

b. who performed the audit work and the date such work was completed; and

c. who reviewed the audit work performed and the date and extent of such review.

(4) Evidence of Compliance or (5) Follow Up Review


54. The member has not documented discussions of significant matters with management, those charged with governance, and others, including the nature of the significant matters discussed and when and with whom the discussion took place.



55. Information had been identified that was inconsistent with the member’s final conclusion regarding a significant matter and the member has not document how the inconsistency was addressed.



AUDIT COMPLETION AND PROCEDURES

AUDIT COMPLETION: SUBSEQUENT EVENTS

56. The member has not performed audit procedures to obtain sufficient appropriate audit evidence that all events occurring between the date of the financial report and the date of the auditor’s report that required adjustment of, or disclosure in, the financial report had been identified.


AUDIT COMPLETION: GOING CONCERN

57. Based on the audit evidence obtained, the member has not concluded whether, in the member’s judgement, a material uncertainty exists related to events or conditions that, individually or collectively, may have cast significant doubt on the entity’s ability to continue as a going concern.


AUDIT COMPLETION: COMMUNICATING DEFICIENCES IN INTERNAL CONTROL TO THOSE CHARGED WITH GOVERNANCE AND MANAGEMENT 58. The member has not communicated in writing any significant deficiencies in

internal control identified during the audit to those charged with governance and, where appropriate, to management, on a timely basis.


Non-compliance with ASA 265.9-10 ISA (NZ) 265.9-10

AUDIT COMPLETION: WRITTEN REPRESENTATION

59. The member has not obtained written representation from the management with appropriate responsibilities//those charged with governance for the financial report and knowledge of the matters concerned.


Non-compliance with ASA 580.9 ISA (NZ) 580.NZ9.1




60. The member has not requested management to provide written representation that:

a. it has fulfilled its responsibility for the preparation of the financial report in accordance with the applicable financial reporting framework and other statutory reporting requirements, including where relevant their fair presentation, as set out in the terms of the audit engagement;

b. it has provided the member with all relevant information and access as agreed in the terms of the audit engagement and all transactions have been recorded and are reflected in the financial report;

c. they acknowledge their responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud:

a. they have disclosed to the member the results of management’s assessment of the risk that the financial report may be materially misstated as a result of fraud;

b. they have disclosed to the member their knowledge of fraud or suspected fraud affecting the entity;

c. they have disclosed to the member their knowledge of any allegations of fraud, or suspected fraud, affecting the entity’s financial report communicated by employees, former employees, analysts, regulators, or others;

d. all known instances of non-compliance or suspected non-compliance with laws and regulations whose effects should be considered when preparing the financial report have been disclosed to the member;

e. they believe the effects of uncorrected misstatements are immaterial, individually and in aggregate, to the financial report as a whole;

f. all known actual or possible litigation and claims whose effects should be considered when preparing the financial report have been disclosed to the member and accounted for and disclosed in accordance with the applicable financial reporting framework;

g. they believe significant assumptions used in making accounting estimates are reasonable;

h. where the applicable financial reporting framework establishes related party requirements, they have disclosed to the member the identity of the entity’s related parties and all the related party relationships and transactions of which they are aware and they have appropriately accounted for and disclosed such relationships and transactions in accordance with the requirements of the framework;

i. all events occurring subsequent to the date of the financial report and for which the applicable financial reporting framework requires adjustment or disclosure have been adjusted or disclosed; and

j. where events or conditions have been identified that may cast significant doubt on the entity’s ability to continue as a going concern, regarding their plans for future actions and the feasibility of these plans.


Non-compliance with ASA 580.10 ISA (NZ) 580.NZ10.1 ASA 580.11 ISA (NZ) 580.NZ11.1 ASA 240.39a-d ISA (NZ) 240.39.NZ39.1a-d ASA 250.16 ISA (NZ) 250.NZ16.1

ASA 450.14 ISA (NZ) 450.NZ14.1 ASA 502.6 ISA (NZ) 501.NZ10.1

ASA 540.22 ISA (NZ) 540.NZ22.1

ASA 550.26 ISA (NZ) 550.NZ26.1

ASA 560.9 ISA (NZ) 560.NZ9.1

ASA 570.16e ISA (NZ) 570.NZ16.1 61. The member has not obtained the written representation that was

a. dated as near as practicable to, but not after, the date of the auditor’s report on the financial report; nor

b. for all the financial report(s) and period(s) referred to in the auditor’s report.



62. The member has not determined whether the financial report includes the comparative information required by the applicable financial reporting framework and whether such information is appropriately classified.


AUDIT COMPLETION: AUDIT REPORT

63. The member has not issued the auditor’s report in writing. (5) Follow Up Review Non-compliance with ASA 700.20 ISA (NZ) 700.20




64. The member has not issued the auditor’s report that:

a. has a title that clearly indicates that it is the report of an independent auditor?

b. is addressed, as appropriate, based on the circumstances of the engagement?

c. includes a section with the heading of ‘Opinion’ that: a. identifies the entity whose financial report has been audited; b. states that the financial report has been audited;

c. identifies the title of each statement that comprises the financial report,

d. refers to the notes, including the summary of significant accounting policies; and

e. specifies the date of, or period covered by each financial statement comprising the financial report?

d. includes a section, directly following the ‘Opinion’ section, with the heading ‘Basis for Opinion’ that:

a. states the audit was conducted in accordance with (AU: Australian Auditing Standards; or NZ: International Standards on Auditing (New Zealand));

b. refers to the section of the auditor’s report that describes the member’s responsibilities under the (AU: Australian Auditing Standards; or NZ: International Standards on Auditing (New Zealand));

c. includes a statement that the member is independent of the entity in accordance with the relevant ethical requirements relating to the audit, and has fulfilled the member’s other ethical responsibilities in accordance with these requirements; [NZ: in New Zealand, the statement should refer to Professional and Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board (ISA (NZ) 700.NZ28c]; and

d. states whether the member believes that the audit evidence the member has obtained is sufficient and appropriate to provide a basis for the member’s opinion. [NZ: includes a statement as to the existence of any relationship (other than that of auditor) which the member has with, or any interests which the member has in, the entity (ISA (NZ) 700.NZ28.1]

e. includes a section with a heading ‘Responsibilities of Management/Those Charged with Governance for the Financial Report’?

f. includes a section with the heading ‘Auditor’s Responsibilities for the Audit of the Financial Report’?

g. includes a section with a heading ‘Report on Other Legal and Regulatory Requirements’, if the member addresses other reporting responsibilities in the auditor’s report on the financial report.



ASA 700.21 ISA (NZ) 700.21

ASA 700.23-27 ISA (NZ) 700.23-24 ASA 700.28 ISA (NZ) 700.28 ASA 700.33-36 ISA (NZ) 700.NZ33.1-36

ASA 700.37-40 ISA (NZ) 700.37-40 ASA 700.43-45 ISA (NZ) 700.43-45

65. The auditor’s report has not been signed by the member. (4) Evidence of Compliance


66. The auditor’s report has not named the location in the jurisdiction where the member practices.



67. The auditor’s report has been dated earlier than the date on which the member obtained sufficient appropriate audit evidence on which to base the member’s opinion on the financial report.






68. The auditor’s report was required by law or regulation of a specific jurisdiction to use a specific layout or wording of the auditor’s report and the member’s report refers to (AU: Australian Auditing Standards; or NZ: International Standards on Auditing (New Zealand)), and the auditor’s report did not include at a minimum each of the following elements? a. a title; b. an addressee, as required by the circumstances of the engagement;

c. an Opinion section containing an expression of opinion on the financial report and a reference to the applicable financial reporting framework used to prepare the financial report;

d. an identification of the entity’s financial report that has been audited;

e. a statement that the member is independent of the entity in accordance with the relevant ethical requirements relating to the audit, and has fulfilled the member’s other ethical requirements in accordance with these requirements. [AU: The statement should identify the relevant ethical requirements applicable within Australia; or NZ: in New Zealand, the statement should refer to Professional and Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board];

f. AU: a description of management’s responsibilities for the preparation of the financial report and an identification of those responsible for the oversight of the financial reporting process; NZ: a description of the responsibilities of those charged with governance for the preparation of the financial statements;

g. a reference to (AU: Australian Auditing Standards; or NZ: International Standards on Auditing (New Zealand)) and the law or regulation, and a description of the auditor’s responsibilities for an audit of the financial report;

h. AU: the name of the engagement partner where required by law or regulation; NZ: for audits of complete sets of general purpose financial statements of FMC reporting entities considered to have a higher level of public accountability, the name of the engagement partner unless, in rare circumstances, such disclosure is reasonably expected to lead to a significant personal security threat (ISA (NZ) 700.NZ50(1))

i. the member’s signature; j. the member’s address; k. the date of the auditor’s report.



69. The member did not modify the opinion in the auditor’s report when: a. the member concluded that, based on the audit evidence obtained, the

financial report as a whole was not free from material misstatement; or

b. the member was unable to obtain sufficient appropriate audit evidence to conclude that the financial report as a whole was free from material misstatement.



70. The member modified the opinion and they have not used the heading ‘Qualified Opinion’, ‘Adverse Opinion’, or ‘Disclaimer of Opinion’, as appropriate, for the Opinion section.



71. The member did not include an Emphasis of Matter paragraph in the auditor’s report when the member considered it necessary to draw users’ attention to a matter presented or disclosed in the financial report that was of such fundamental importance to users’ understanding of the financial report but such matter would not result in the modification of the member’s opinion and had not been determined to be a key audit matter to be communicated in the auditor’s report.



72. The member has not stated in an Other Matter paragraph in the auditor’s report that the corresponding figures and/or the comparative financial report are unaudited when the prior period financial report was not audited.


Non-compliance with ASA 710.14 and ASA 710.19 ISA (NZ) 710.14 and ISA (NZ) 710.19




73. The member did not, when the financial report of the prior period was audited by a predecessor auditor and the member referred to the predecessor auditor’s report on the corresponding figures, in addition to expressing an opinion on the current period’s financial report, state in an Other Matter paragraph:

a. That the financial statements of the prior period were audited by the predecessor auditor;

b. The type of opinion expressed by the predecessor auditor and, if the opinion was modified, the reasons therefore; and

c. The date of that report.


Non-compliance with ASA 710.13 and ASA 710.17 ISA (NZ) 710.13 and ISA (NZ) 710.17

74. The auditors’ report that the member issued on the special purpose financial report does not include an Emphasis of Matter paragraph, under an appropriate heading, alerting users of the auditor’s report that the financial report has been prepared in accordance with a special purpose framework and that, as a result, the financial report may not be suitable for another purpose.



AUDIT COMPLETION: MEMBER’S REPRESENTATION IN THE AUDIT REPORT

75. The member represented compliance with Australian Auditing Standards (or NZ: ISAs (NZ) or ISAs) in the member’s audit report in cases where they have not complied with ALL of the Australian Auditing Standards (or NZ: ISAs (NZ) or ISAs) relevant to the audit.



AUDIT COMPLETION: COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE

76. The member has not communicated significant findings from the audit to those charged with governance.



77. There were matters required to be communicated orally and the member did not include them in the audit documentation, including when and to whom they were communicated.



78. There were matters required to be communicated in writing and the member did not retain a copy of the communication as part of the audit documentation.



OTHER PROCEDURES: EXTERNAL CONFIRMATIONS

79. The member has not maintained control over external confirmation requests when using external confirmation procedures.


80. The member has not performed alternative audit procedures to obtain relevant and reliable audit evidence, in the case of each non-response.


OTHER PROCEDURES: EVALUATION OF MISSTATEMENTS IDENTIFIED DURING THE AUDIT

81. Management refused to correct some or all of the misstatements communicated by the member and the member did not obtain an understanding of management’s reasons for not making the corrections nor take that understanding into account when evaluating whether the financial report as a whole is free from material misstatement.


82. The member has not determined whether such uncorrected misstatements were material, individually or in aggregate.


83. The member has not included in the audit documentation:

a. the amount below which misstatement would be regarded as clearly trivial;

b. all misstatement accumulated during the audit and whether they have been corrected; and/or

c. the member’s conclusion as to whether uncorrected misstatements are material, individually or in aggregate, and the basis for that conclusion.





OTHER PROCEDURES: AUDIT CONSIDERATIONS RELATING TO AN ENTITY USING A SERVICE ORGANISATION



OTHER PROCEDURES: USING THE WORK OF INTERNAL AUDITORS

85. The member, as the external auditor, has not determined whether the work of the internal audit function could have bene used for purposes of the audit.

(2) Requirements for Compliance


86. The member used the work of the internal audit function and has not included in the audit documentation:

a. the evaluation of whether the function’s organizational status and relevant policies and procedures adequately support the objectivity of the internal auditors;

b. the level of competence of the function; and whether the function applies a systematic and disciplined approach, including quality control: and/or

c. The nature and extent of the work used and the basis for that decision; and The audit procedures performed by the member to evaluate the adequacy of the work used.


OTHER PROCEDURES: USING THE WORK OF INTERNAL AUDITORS

87. The member has used an expert and has not evaluated:

a. whether the expert has the necessary competence, capabilities and objectivity for the member’s purposes; and/or

b. the adequacy of the expert’s work for the member’s purposes.


ASA 620.12 ISA (NZ) 620.12 88. The member has not included in the audit documentation, the nature and

scope of and conclusions resulting from, consultations undertaken during the course of the audit engagement.

(5) Follow Up Review Non-compliance with ASA 220.24d ISA (NZ) 220.24d

OTHER PROCEDURES: SPECIFIC CONSIDERATIONS FOR INVENTORY AND SEGMENT INFORMATION

89. Inventory was material to the financial report and the member has not obtained sufficient appropriate audit evidence regarding the existence and condition of inventory by: a. attending the physical inventory count, unless impracticable; and

b. performing audit procedures over the entity’s final inventory records to determine whether they accurately reflect actual inventory count results.


90. Segment information was presented and the member has not obtained sufficient appropriate audit evidence regarding the presentation and disclosure of the segment information, including:

a. obtaining an understanding of the methods used by management in determining segment information;

b. evaluating whether such methods are likely to result in disclosure in accordance with the applicable financial reporting framework; and where appropriate, testing the application of such methods; and

c. performing analytical procedures or other audit procedures appropriate in the circumstances.


OTHER PROCEDURES: SPECIAL CONSIDERATIONS – AUDITS OF A GROUP FINANCIAL REPORT (INCLUDING THE WORK OF COMPONENT AUDITORS)

91. The group engagement team has not established an overall group audit strategy and group audit plan.


92. The group engagement team has not included in the audit documentation the following matters:

a. an analysis of components, indicating those that are significant, and the type of work performed on the financial information of the components;

b. The nature, timing, and extent of the group engagement team’s involvement in the work performed by the component auditors on significant components including, where applicable, the group engagement team’s review of relevant parts of the component auditor’s audit documentation and conclusions thereon; and/or

c. Written communications between the group engagement team and the component auditors about the group engagement team’s requirements.



SELF MANAGED SUPERANNUATION FUND AUDIT ENGAGEMENTS Please note:






EXAMPLE REVIEW FINDINGS (SMSF AUDIT)


1. Member has not member established and maintained a system of quality control in accordance with these standards.


Non-compliance with ASQC1, ASAE 3000.31-33, ASAE 3100.15 and APES 320

2. The member, as the auditor, has not complied with the relevant ethical requirements, including those pertaining to independence, when performing the audit engagement (both financial and compliance audit).

(3) Follow Up Review Non-compliance with ASA 102.5, ASA 200.14. ASAE 3000.Aus20.1, ASAE 3100.12, and APES 110.290

3. The member has not included the following in the audit documentation:

a. issues identified with respect to compliance with relevant ethical requirements and how they were resolved; and/or

b. conclusions on compliance with independence requirements that apply to the audit engagement, and any relevant discussions with the firm that support these conclusions.

(5) Follow Up Review Non-compliance with ASA 220.24(a-b)

4. The member has not performed the following procedures in order to establish the preconditions for an audit: a. determine whether the financial reporting framework to be applied in the

preparation of the financial report is acceptable; and/or

b. obtain the agreement of trustees that they acknowledge and understand their responsibility.

(5) Follow Up Review Non-compliance with ASA 210.6(a-b)

5. The member has not performed acceptance and continuance procedures applicable to the engagement as outlined in their quality control manual, for either new or recurring engagement, prior to commencing the engagement.

(5) Follow Up Review Non-compliance with ASAE 3000.21-26 and ASAE 3100.17

6. The member has other person(s) undertaking work on their behalf and the member did not ensure the person(s) had appropriate competence and capabilities to perform the audit engagement in accordance with Australian Auditing Standards, relevant ethical requirements; and applicable legal and regulatory requirements.

(5) Follow Up Review Non-compliance with ASA 220.14(a)

7. The member has not agreed the terms of the audit engagement with the trustees in an audit engagement letter or other suitable form of written agreement.

Where the compliance engagement is undertaken pursuant to legislation, the minimum applicable compliance engagement terms contained in the legislation have not been included.

(5) Follow Up Review Non-compliance with ASA 210.9-10 and/or ASAE 3000.27 and ASAE 3100.19

8. The following factors have not been included in the audit engagement letter: a. The objective and scope of the audit of the financial report; b. The responsibilities of the auditor; c. The responsibilities of the trustees;

d. Identification of the applicable financial reporting framework for the preparation of the financial report; and

e. Reference to the expected form and content of any reports to be issued by the auditor and a statement that there may be circumstances in which a report may differ from its expected form and content.

(5) Follow Up Review Non-compliance with ASA 210.10




9. For recurring audits, when circumstances arose that required the term of audit engagement to be revised, the member did not remind the trustee(s) of the existing terms of the audit engagement.

(5) Follow Up Review Non-compliance with ASA 210.13 and ASAE 3000.28

10. The member has not communicated with the trustees, the responsibilities of the auditor in relation to the financial report audit.


11. The member has not included in the audit documentation, conclusions reached regarding the acceptance and continuance of client relationships and audit engagements.

(5) Follow Up Review Non-compliance with ASA 220.24(c)

12. The member’s audit file does not have an audit strategy and/or an audit plan.

(5) Follow Up Review Non-compliance with Audit Strategy = ASA 300.7-8 Audit Plan = ASA 300.9

13. The member has not planned the nature, timing, and extent of direction and supervision of engagement team members nor the review of their work.


14. The member has not planned the engagement so that it would be performed effectively.

(5) Follow Up Review Non-compliance with ASAE 3000.40 and ASAE 3100.22

15. The member has not communicated with the trustees an overview of the planned scope and timing of the audit.


16. For an initial audit engagement: a. The member did not communicate with the predecessor auditor, in

compliance with relevant ethical requirements.

b. The member did not obtain sufficient appropriate audit evidence about whether the opening balances contained a misstatement that materially affect the current period’s financial report.

c. If the member was unable to obtain sufficient appropriate audit evidence regarding the opening balances, has the member expressed a qualified opinion or disclaimed an opinion on the financial report.

(5) Follow Up Review Non-compliance with ASA 300.13(b) ASA 510.6 ASA 510.10

17. The member has not performed the required understanding of the fund and its environment, including the Fund’s internal control, sufficient to identify and assess the risk of material misstatements and to design and perform further evidence-gathering procedures.

(5) Follow Up Review Non-compliance with ASA 315.11-12, ASAE 3000.45-49 and ASAE 3100.28

18. The member has not identified and assessed the risks of material misstatement at: a. the financial report level

b. the assertion level for classes of transactions, account balances, and disclosures to provide a basis for designing and performing further audit procedures.


19. The member has not included in the audit documentation, the understanding and risk assessment, as referred to in questions 17 and 18, respectively.


20. The member has not performed one or more of the following procedures to obtain information for use in identifying and assessing the risk of material misstatement due to fraud: a. make enquiries of the trustees and others within the fund;

b. make enquires of those charged with governance where not all of them are involved in the management of the fund;

c. evaluate whether unusual or unexpected relationships that have been identified may indicate risks of material misstatement due to fraud;

d. consider whether other information obtained indicates risks of material misstatement due to fraud;

e. evaluate whether the information obtained from the other risk assessment procedures and related activities performed indicates that one or more fraud risk factors are present?


ASA 240.17-19 ASA 240.20-21 ASA 240.22 ASA 240.23 ASA 240.24

21. When documenting the understanding of the entity and its environment and the assessment of the risks of material misstatement, the member did not include the following:

a. the significant decisions reached during the discussion among the engagement team regarding the susceptibility of the entity’s financial report to material misstatement due to fraud; and

b. the identified and assessed risks of material misstatement due to fraud at the financial report level and at assertion level.





22. The member did not determine whether changes had occurred since the previous audits that may have affected its relevance to the current audits in the instance where the member used information obtained from previous experience with the entity and from previous audits.


23. The member did not include in the audit documentation their general understanding of the legal and regulatory framework applicable to the entity and the industry or sector in which the entity operates and how the entity is complying with that framework.


24. The member did not design and perform audit procedures in order to identify litigation and claims involving the entity which may give risk to a risk of material misstatement.


25. Where the member suspected that there may be non-compliance with laws and regulations, the member did not:

a. discuss the matter with the trustees nor where appropriate, those charged with governance;

b. receive sufficient information to support the entity’s compliance, or evaluate the effect of the lack of sufficient appropriate audit evidence on the member’s opinion; nor

c. evaluate the implications of non-compliance in relation to other aspects of the audit and take appropriate action.

(5) Follow Up Review Non-compliance with ASA 250.19-21

26. The member did not include in the audit documentation, the identified or suspected non-compliance with laws and regulations and the results of discussion with trustees nor, where applicable, those charged with governance and other parties outside the fund.


27. The member did not, as part of the risk assessment procedures, obtain information relevant to identifying the risks of material misstatement associated with related party relationships and transactions.


28. The member has not included in the audit documentation, the names of the identified related parties and the nature of the related party relationship.


29. The member has not, as part of the risk assessment procedures, obtained an understanding of the following in order to provide a basis for the identification and assessment of the risks of material misstatement for accounting estimates:

a. the requirement of the applicable financial reporting framework relevant to accounting estimates, including related disclosures;

b. how trustees identified those transactions, events, and conditions that may give rise to the need for accounting estimates to be recognized or disclosed in the financial report; and

c. how trustees made the accounting estimates and an understanding of the data on which they were based.


30. The member has not, as part of the risk assessment procedures, considered whether events or conditions existed that may have cast significant doubt on the entity’s ability to continue as a going concern nor determined whether the trustees had already performed a preliminary assessment of the fund’s ability to continue as a going concern.


31. The member has not designed and implemented overall responses to address the assessed risks of material misstatement at the financial report level.


32. The member has not designed and performed further audit procedures, including substantive procedures, whose nature, timing, and extent are based on and are responsive to the assessed risks of material misstatement at the assertion level.

(5) Follow Up Review Non-compliance with ASA 330.6, ASA 330.18 and ASA 520.5


a. The overall responses to address the assessed risk of material misstatement at the financial report level, and the nature, timing, and extent of the further audit procedures performed;

b. The linkage of those procedures with the assessed risk at the assertion level; nor

c. The results of the audit procedures, including the conclusions where there are not otherwise clear.





34. The member has not included the following in the audit documentation:

a. the overall responses to the assessed risks of material misstatement due to fraud at the financial report level and at the assertion level;

b. the results of the audit procedures, including those designed to address the risks of management of override of controls?

c. communication about fraud made to the trustees, those charged with governance, regulators, and others?

d. conclusion about the presumption that there is a risk of material misstatement due to fraud related to revenue recognition is not applicable in the circumstances of the engagement, and included the reasons for that conclusion?

(5) Follow Up Review Non-compliance with ASA 240.45(a) ASA 240.45(b) ASA 240.46 ASA 240.47

35. The member planned to use the audit evidence from a previous audit about the operating effectiveness of specific controls and did not establish the continuing relevance of that evidence by obtaining audit evidence about whether significant changes in those controls had occurred subsequent to the previous audit nor documenting the conclusion reached about relying on such controls.

(5) Follow Up Review Non-compliance with ASA 330.14 and ASA 330.29

36. The member planned to rely on controls over a risk the member had determined to be a significant risk and they did not test those controls in the current period and evaluated the operating effectiveness of those controls.


37. The member’s substantive procedures did not include the following audit procedures related to the financial report closing process:

a. agreeing or reconciling the financial report with the underlying accounting records; nor

b. examining material journal entries and other adjustments made during the course of preparing the financial report.


38. The member had not considered whether external confirmation procedures were to be performed as substantive audit procedures.


39. The member did not consider engagement risk when planning and performing the engagement and reducing the engagement risk to an acceptable level in the circumstances of the compliance engagement.

(5) Follow Up Review Non-compliance with ASAE 3100.40 And ASAE 3100.43

40. The member found compliance breaches that were material and they did not evaluate the impact on the member’s planned engagement approach.

(5) Follow Up Review Non-compliance with ASAE 3100.49

41. The member did not determine materiality for the financial report as a whole (overall materiality) nor, if applicable, the materiality level or levels for particular classes of transactions, account balances, or disclosure.


42. The member did not determine performance materiality. (5) Follow Up Review Non-compliance with ASA 320.11

43. The member did not include in the audit documentation, the following amounts and factors considered in their determination: a. Materiality for the financial report as a whole;

b. If applicable, the materiality level or levels for particular classes of; transactions, account balances, or disclosure;

c. Performance materiality; and d. Any revision of (a)-(c) as the audit progressed.


44. The member did not consider materiality when planning and performing compliance engagement.


45. When designing and performing audit procedures the member did not consider the relevance and reliability of the information used as audit evidence.


46. The information used as audit evidence had been prepared using the work of a management’s expert, and the member, having regard to the significance of that expert’s work for the audit purposes did not: a. Evaluate the competence, capabilities, and objectivity of that expert; b. Obtain an understanding of the work of that expert; nor

c. Evaluate the appropriateness of that expert’s work as audit evidence for the relevant assertion.


47. When the member designed tests of controls and tests of details they did not determine the means of selecting items for testing that were effective in meeting the purpose of the audit procedure.





48. When the member designed an audit sample they did not:

a. consider the purpose of the audit procedure and the characteristics of the population from which the sample will be drawn?

b. determine a sample size sufficient to reduce sampling risk to an acceptably low level?

c. select items for the sample in such a way that each sampling unit in the population has a chance of selection.


ASA 530.7 ASA 530.8

49. The member did not obtain sufficient appropriate audit evidence to reduce audit risk to an acceptably low level and thereby enable the member to draw reasonable conclusions on which to base their opinion.


50. The member did not obtain sufficient appropriate evidence on which to base the conclusion expressed in the compliance report.

(5) Follow Up Review Non-compliance with ASAE 3000.64-65, ASAE 3100.51 And ASAE 3100.75

51. The member identified accounting estimates as having high estimation uncertainty and they did not determine the appropriate responses to address the risk of material misstatement associated with accounting estimates.


52. The member did not include in their audit documentation: a. The basis for the member’s conclusions about the reasonableness of

accounting estimates and their disclosure that give rise to significant risks;

b. Indicators of possible management bias, if any.


53. The member has not prepared audit documentation on a timely basis that is sufficient and appropriate to provide basis for the member’s conclusion and evidence that the engagement performed was in accordance with the relevant standards.

(5) Follow Up Review Non-compliance with ASA 230.7, ASAE 3000.79 and ASAE 3100.72

54. The member has not prepared audit documentation that is sufficient to enable an experienced auditor, having no previous connection with the audit, to understand:

a. The nature, timing, and extent of the audit procedures performed to comply with the Australian Auditing Standards and applicable legal and regulatory requirements;

b. The results of the audit procedures performed, and the audit evidence obtained; and

c. Significant matters arising during the audit, the conclusions reached thereon, and significant professional judgements made in reaching those conclusions.


55. In documenting the nature, timing, and extent of audit procedures performed, the member did not record: a. the identifying characteristics of the specific items or matters tested;

b. who performed the audit work and the date such work was completed; and

c. who reviewed the audit work performed and the date and extent of such review.


56. The member has not documented discussions of significant matters with trustees, those charged with governance, and others, including the nature of the significant matters discussed and when and whom the discussion took place.


57. Information has been identified that was inconsistent with the member’s final conclusion regarding a significant matter and the member did not document how the inconsistency was addressed.


58. The member has not performed audit procedures to obtain sufficient appropriate audit evidence that all events which occurred between the date of the financial report and the date of the auditor’s report that required adjustment of, or disclosure in, the financial/compliance report had been identified.


59. The member has not considered the effect on the fund’s compliance with SIS Act and SIS Regulations and the compliance report of events up to the date of the compliance report.


60. Based on the audit evidence obtained, the member has not concluded whether, in the member’s judgement, a material uncertainty existed related to events or conditions that, individually or collectively, may have cast significant doubt on the fund’s ability to continue as a going concern.





61. The member has not communicated in writing any significant deficiencies in internal control identified during the audit to those charged with governance nor, where appropriate, to trustees, on a timely basis.


62. The member has not obtained written representations from the trustees. (5) Follow Up Review Non-compliance with ASA 580.9, ASAE 3000.56-60 and ASAE 3100.58 63. The member has not requested the trustees to provide written

representation of any one of the following that:

a. it has fulfilled its responsibility for the preparation of the financial report in accordance with the applicable financial reporting framework, including where relevant their fair presentation, as set out in the terms of the audit engagement;

b. it has provided the member with all relevant information and access as agreed in the terms of the audit engagement and all transactions have been recorded and are reflected in the financial report;

c. (i) they acknowledge their responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud;

(ii) they have disclosed to the member the results of the trustees’ assessment of the risk that the financial report may be materially misstated as a result of fraud;

(iii) they have disclosed to the member their knowledge of fraud or suspected fraud affecting the entity;

d. all known instances of non-compliance or suspected non-compliance with laws and regulations whose effects should be considered when preparing the financial report have been disclosed to the member;

e. they believe the effects of uncorrected misstatements are immaterial, individually and in aggregate, to the financial report as a whole;

f. all known actual or possible litigation and claims whose effects should be considered when preparing the financial report have been disclosed to the member and accounted for and disclosed in accordance with the applicable financial reporting framework;

g. they believe significant assumptions used in making accounting estimates are reasonable;

h. where the applicable financial reporting framework establishes related party requirements, they have disclosed to the member the identity of the entity’s related parties and all the related party relationships and transactions of which they are aware and they have appropriately accounted for and disclosed such relationships and transactions in accordance with the requirements of the framework;

i. all events occurring subsequent to the date of the financial report and for which the applicable financial reporting framework requires adjustment or disclosure have been adjusted or disclosed;

j. they have assessed the entity’s ability to continue as a going concern;

k. they have kept accounting statements on file for at least five years as required by s.35AE and s.35B of the SIS Act 1993 (SISA);

l. they have kept any minutes and records on file for at least 10 years as required by s.103, s.104A, and s.105 of SISA;

m. they are not disqualified persons as required by s.126K of SISA;

n. their assets are valued at market value in the fund’s accounts as required by r. 8.02B of SIS Regulation 1994 (SISR);

o. they have not recognised, or in any way encouraged, or sanctioned an assignment of members’ superannuation interests and a charge over, or in relation to the member’s benefits as required by r.13.12 and r.13.13 of SISR;

p. they have not given a charge over, or in relation to an asset of the fund as required by r.13.14 of SISR.


ASA 580.11

ASA 240.30(a)

ASA 240.39(b)

ASA 240.39(c-d)

ASA 240.250.16 ASA 450.14

ASA 502.6

ASA 540.22 ASA 550.26

ASA 560.9

ASA 570.16(e) ASAE 3100.58 ASAE 3100.58 ASAE 3100.58

ASAE 3100.58 ASAE 3100.58 ASAE 3100.58

64. The member has not: a. obtained the written representation ensuring that it was dated as near as

practicable to, but not after, the date of the auditor’s report on the financial report; and/or

b. obtained the written representation that is for all the financial report(s) and period(s) referred to in the auditor’s report.


65. The member has not determined whether the financial report includes the comparative information required by the applicable financial reporting framework and whether such information is appropriately classified.





66. The member has not issued the auditor’s report in writing. (5) Follow Up Review Non-compliance with ASA 700.20, ASAE 3000.67 and ASAE 3100.78 67. The member has not signed the auditor’s report. (5) Follow Up Review Non-compliance with ASA 700.47

68. The auditor’s report does not name the location in the jurisdiction where the member practices.


69. The auditor’s report has been dated earlier than the date on which the member obtained sufficient appropriate audit evidence on which to base the member’s opinion on the financial report.


70. The member is required by law or regulation of a specific jurisdiction to use a specific layout or wording of the auditor’s report (in this case by Australian Taxation Office) and the member’s report refer to Australian Auditing and Assurance Engagement Standards and the member has not used the latest approved form of report.

(5) Follow Up Review Non-compliance with ASA 700.50, ASAE 3000.71 and ASAE 3100.80

71. The member did not modify the opinion in the auditor’s report when: a. the member concluded that, based on the audit evidence obtained, the

financial report as a whole was not free from material misstatement; nor

b. the member was unable to obtain sufficient appropriate audit evidence to conclude that the financial report as a whole was free from material misstatement.


72. The member modified the opinion and did not use the heading ‘Qualified Opinion’, ‘Adverse Opinion’, or ‘Disclaimer of Opinion’, as appropriate, for the Opinion section.


73. The member identified a matter that gave rise to a qualified, adverse, or a disclaimer and they did not consider to separately report these matters to the trustees.


74. The member did not include an Emphasis of Matter paragraph in the auditor’s report when they considered it necessary to draw users’ attention to a matter presented or disclosed in the financial report that was of such fundamental importance to users’ understanding of the financial report but such matter would not result in the modification of the member’s opinion and had not been determined to be a key audit matter to be communicated in the audtior’s report.


75. The member has not stated in an Other Matter paragraph in the auditor’s report that the corresponding figures and/or the comparative financial report are unaudited where the prior period reports was not audited.


76. The financial report of the prior period was audited by a predecessor auditor and the member was not prohibited by law or regulation from referring to the predecessor auditor’s report on the corresponding figures and decided to do so, and they did not, in addition to expressing an opinion on the current period’s financial report, state in an Other Matter paragraph:

a. That the financial statements of the prior period were audited by the predecessor auditor;

b. The type of opinion expressed by the predecessor auditor and, if the opinion was modified, the reasons therefore; and

c. The date of that report.


77. The auditors’ report that the member issued on the special purpose financial report does not include an Emphasis of Matter paragraph, under an appropriate heading, alerting users of the auditor’s report that the financial report has been prepared in accordance with a special purpose framework and that, as a result, the financial report may not be suitable for another purpose.


78. The member represented compliance with Australian Auditing Standards in the member’s audit report in cases where he/she has not complied with ALL of the Australian Auditing Standards relevant to the audit.


79. The member has not communicated significant findings from the audit to those charged with governance.


80. There were matters required to be communicated that were communicated orally and the member did not include them in the audit documentation, including when and to whom they were communicated nor where the matters were required to be communicated were communicated in writing, the member did not retain a copy of the communication as part of the audit documentation.





81. The member has not evaluated, individually and in aggregate, whether deficiencies and/or compliance breaches that came to their attention were material nor have they made the trustees aware as soon as possible.


82. The member has not considered: a. other reporting responsibilities as specified in the terms of the

engagement; and/or b. other reporting obligations set by regulators, legislators, and statutory

bodies.

(5) Follow Up Review Non-compliance with ASAE 3100.88 ASAE 3100.89

83. The member has not, when using external confirmation procedures, maintained control over external confirmation requests.


84. The member has not, in the case of each non-response, performed alternative audit procedures to obtain relevant and reliable audit evidence.


85. The member did not, in the instance where the trustees refused to correct some or all of the misstatements communicated by the member, obtain an understanding of their reasons for not making the corrections nor took that understanding into account when evaluating whether the financial report as a whole is free from material misstatement.





a. the amount below which misstatement would be regarded as clearly trivial;

b. all misstatement accumulated during the audit and whether they have been corrected; and/or

c. the member’s conclusion as to whether uncorrected misstatements are material, individually or in aggregate, and the basis for that conclusion.


88. The member has used an expert and they have not evaluated: a. whether the expert had the necessary competence, capabilities and

objectivity for the member’s purposes; and b. the adequacy of the expert’s work for the member’s purposes.

(5) Follow Up Review Non-compliance with ASA 620.9, ASA 620.12, ASAE 3000.52-54 and ASAE 3100.62

89. The member has not included in the audit documentation the nature and scope of and conclusions resulting from consultations undertaken during the course of the audit engagement.

(5) Follow Up Review Non-compliance with ASA 220.24(d)

90. The member has not obtained an understanding of the services provided by a service organization to the trustees, nor did they evaluate the design and implementation of the trustees’ internal control relating to these services.


91. There is no evidence on file to support the member’s conclusion on the fund/trustee’s compliance with the relevant provisions of the SIS Act and SIS Regulation required by the Australian Taxation Office.


92. The member has not met, or is unlikely to meet, the competency requirements as an approved SMSF auditor.

(5) Follow Up Review Non-compliance with CPA Australia By-Law 4.6, s 128F and s 128Q of SIS Act 1993 93. The member has not, within 30 days after the end of:

a. the 12 month period beginning on the day of the auditor’s registration as an approved SMSF auditor took effect; and

b. each subsequent 12 month period; given to the Regulator an annual statement, in the approved form, relating to that period.

(5) Follow Up Review Non-compliance with s 128G of SIS Act 1993

94. The member has not, immediately after forming the auditor opinion: a. Told the trustee about any contravention of the SIS Act / Regulations or

any significant matter that may have occurred, may be occurring, or may occur?

b. Told the Regulator about the contravention of the SIS Act / Regulations or any significant matter in the approved form.

(5) Follow Up Review Non-compliance with s 129 of SIS Act 1993




95. The member did not a. evaluate the solvency or the financial position of the fund; nor

b. report in writing any relevant information including identified breaches to the Regulator.

(5) Follow Up Review Non-compliance with s 130 and s 130A of SIS Act 1993, and r 9.03 and r 9.04 SIS Reg 1994

96. The member has not notified the Regulator in writing of circumstances either as soon as possible, or in within 28 days, when they became aware of circumstances that amounted to an attempt, in relation to an audit of the SMSF, by any person to unduly influence, coerce, manipulate, or mislead the member or the audit team conducting the audit; or an attempt by any person to otherwise interfere with the proper conduct of the audit.

(5) Follow Up Review Non-compliance with S 130BA of SIS Act 1993


ASSURANCE ENGAGEMENTS Please note:


• When in doubt as to the type of report to issue in a particular set of circumstances, Reviewers are requested to contact the Quality Review Department directly to seek advice

• Assurance engagements must be considered in light of the mandatory professional standards contained in the Standards on Assurance Engagements (ASAE\ISAE(NZ)\SAEs).

• The report type suggested in each instance below is the type that should be issued by a Reviewer in such an instance. The Quality Review Department will consider each recommendation and may change the type of report issued to a Member at its discretion

• The Quality Review Department on considering the report prepared by the Reviewer in conjunction with the Member’s comments, may change the type of the report


EXAMPLE REVIEW FINDINGS (ASSURANCE ENGAGEMENTS)


1. Member has not complied with relevant ethical requirements relating to assurance engagements.

(5) Follow up Review Non-compliance with ASAE 3000.Aus20.1/ISAE (NZ) 3000.20, ASAE 3100.12/SAE 3100.10, or ASAE 3500.19

2. Member has not implemented quality control procedures that are applicable to the individual engagement.


Non-compliance with ASAE 3000.31-33/ISAE (NZ) 3000.31-33, ASAE 3100.15/SAE 3100.12, or ASAE 3500.23

3. Member has not performed acceptance and continuance procedures applicable to the engagement(s) as outlined in their quality control manual, for both new or recurring engagements, prior to commencing the engagement.




Non-compliance with ASAE 3000.21-26/ISAE (NZ) 3000.21-26, ASAE 3100.17/SAE 3100.13, or ASAE 3500.27

4. Member has not agreed the terms of the engagement with the client in writing. (2) Requirements for Compliance or


Non-compliance with ASAE 3000.27/ISAE (NZ) 3000.27, ASAE 3100.19/SAE 3100.23, or ASAE 3500.28

5. Member has not planned the engagement so that it would be performed in an effective manner, including setting the scope, timing and direction of the engagement, and determining the nature, timing and extent of planned procedures that are required to be carried out in order to achieve the objective of the assurance practitioner.

(5) Follow Up Review Non-compliance with ASAE 3000.40/ISAE (NZ) 3000.40, ASAE 3100.22/SAE 3100.29, or ASAE 3500.32

6. Member didn’t obtain an understanding of the subject matter/requirements/activity and other engagement circumstances, sufficient to identify and assess the risk of material misstatements/risk of entity’s non-compliance/risk of activity not being economic, efficient or effective, and sufficient to design and perform further evidence-gathering procedures.

(5) Follow Up Review Non-compliance with ASAE 3000.46-49/ISAE (NZ) 3000.46-49, ASAE 3100.28/SAE 3100.31, or ASAE 3500.37

7. Member did not assess: a. the appropriateness of the criteria/subject matter/activity; and b. the suitability of the criteria to evaluate or measure the criteria/subject

matter/performance of the activity (as appropriate)?


Non-compliance with ASAE 3000.41/ISAE (NZ) 3000.41, ASAE 3100.33/SAE 3100.14 and ASAE 3100.36/SAE 3100.17, or ASAE 3500.40 and ASAE 3500.44

8. Member did not: a. consider materiality and engagement risk when planning and performing the

engagement, evaluating whether the subject matter was free from material misstatement; and

b. reduce engagement risk to an acceptable level in the circumstances of the engagement

(3) Representation of Compliance or (5) Follow Up Review

Non-compliance with ASAE 3000.44/ISAE (NZ) 3000.44, ASAE 3100.40/SAE 3100.33 and ASAE 3100.43/SAE 3100.34, or ASAE 3500.53 and ASAE 3500.58

9. Where the work of an expert was used the member did not: a. evaluate the competence, capabilities and objectivity of the expert; and b. obtain a sufficient understanding of the field of expertise of the expert; and c. agree on the nature, scope and objectives of the expert’s work; and d. evaluate the adequacy of the expert’s work for the member’s purposes.

(5) Follow Up Review Non-compliance with ASAE 3000.52-54/ISAE (NZ) 3000.52-54, ASAE 3100.62/SAE 3100.38, or ASAE 3500.61




10. The member did not: a. evaluate the sufficiency and appropriateness of the evidence obtained;

nor b. formed a conclusion about whether the subject matter information is free

of material misstatement.

(5) Follow Up Review Non-compliance with ASAE 3000.64-65/ISAE (NZ) 3000.64-65, ASAE 3100.51/SAE 3100.37 and ASAE 3100.75/SAE 3100.56, or ASAE 3500.62 and ASAE.3500.79.

11. The member did not: a. obtained written representations from the appropriate party(ies), and

ensured that the date of the written representations was as near as practicable to, but not after, the date of the assurance report; or

b. in the instance written representation were not provided, there is doubt about those providing the representations or that the written representations were not reliable, shown evidence that they discussed the matter with the appropriate party(ies), re-evaluated the integrity of those from whom the representations were requested and evaluated the effect that it had on the reliability of the representations and evidence in general and took appropriate actions including determining the possible effect on the conclusion in the assurance report.

(5) Follow Up Review Non-compliance with ASAE 3000.56-60/ISAE (NZ) 3000.56-60, ASAE 3100.58/SAE 3100.45, or ASAE 3500.70.

12. The member did not consider the effects on the subject matter information/entity’s compliance with requirements/activity (as applicable for the engagement), and on the member’s report, of events up to the date of the report.

(5) Follow Up Review Non-compliance with ASAE 3000.61/ISAE (NZ) 3000.61, ASAE 3100.70/SAE 3100.49, or ASAE 3500.74.

13. The member has not prepared documentation that is sufficient and appropriate to support the conclusion(s) (and any recommendations), and that provides evidence that the engagement was performed in accordance with ASAEs / ISAEs.

(5) Follow Up Review Non-compliance with ASAE 3000.79/ISAE (NZ) 3000.79, ASAE 3100.72/SAE 3100.50, or

ASAE 3500.76.

14. The assurance report, which must be in writing, does not contain a clear expression of the member’s conclusion about the subject matter information/compliance with the requirements as measured by the suitable criteria /against the objectives communicated or agreed.

(5) Follow Up Review Non-compliance with ASAE 3000.67/ISAE (NZ) 3000.67, ASAE 3100.78/SAE 3100.57, or ASAE 3500.82.

15. The member’s report did not include one or more the following: a. a title that clearly indicates the report is an independent assurance report; b. an addressee; c. identification or description of the level of assurance obtained by the

member, the subject matter information and, where appropriate, the underlying subject matter (ASAE 3000/ISAE (NZ) 3000), or, identification and description of the requirements (ASAE 3100/SAE 3100), or, identification and description of the activity (ASAE 3500);

d. the period of compliance being reported on by the member (ASAE 3100/SAE 3100 only);

e. identification and description of the applicable/suitable criteria; f. where appropriate, a description of any significant, inherent limitation

associated with the measurement/evaluation of the underlying subject matter/compliance with the requirements/activity against the applicable/suitable criteria;

g. when the applicable criteria are designed for a specific purpose, a statement alerting readers to this fact and that, as a result, the subject matter information may not be suitable for another purpose(ASAE 3000/ISAE (NZ) 3000), or, when the suitable criteria used to evaluate the requirements are available only to specific intended users, or are relevant only for a specific purpose, a statement restricting the use of the compliance report to those intended users or that purpose (ASAE 3100/SAE 3100), or, when the criteria used to evaluate or measure the activity are available only to specific intended users, or are relevant only to a specific purpose, a statement restricting the use of the assurance report to those intended users (ASAE 3500);

h. a statement to identify the responsible party and the measurer or evaluator if different, and to describe their responsibilities and the member’s responsibilities;

i. a statement that the engagement was performed in accordance with ASAE 3000 / ISAE NZ 3000 or, where there is a subject-matter specific ASAE / ISAE NZ / SAE NZ, that ASAE / ISAE NZ / SAE NZ and the level of assurance provided;

j. a statement that the firm of which the member is part of applies ASQC1; k. a statement that the member complies with the independence and other

relevant ethical requirements related to assurance engagements;


Non-compliance with ASAE 3000.69/ISAE (NZ) 3000.69, ASAE 3100.80/SAE 3100.58, or ASAE 3500.83.




15. continued… l. an informative summary of the work performed as the basis for the

member’s conclusion; m. the member’s conclusion:

i. when appropriate, the conclusion shall inform the intended users of the context in which the member’s conclusion is to be read;

ii. in a reasonable assurance engagement, expressed in the positive form;

iii. in a limited assurance engagement, expressed in a form that conveys whether, based on the procedures performed and evidence obtained, a matter(s) has come to the member’s attention to cause the member to believe that the subject matter information is materially miss tated (ASAE 3000/ISAE (NZ) 3000), or, in a limited assurance engagement, the conclusion shall be expressed in the negative form (ASAE 3100/SAE 3100 or ASAE 3500);

iv. where both positive and negative forms are expressed, shall clearly separate the two types of conclusions (ASAE 3500 only);

v. where the member expresses a conclusion that is other than unqualified, the compliance report shall contain a clear description of all the reasons (ASAE 3100/SAE 3100, or, ASAE 3500)

vi. the conclusion in (ii) and (iii) shall be phrased using appropriate words for the underlying subject matter and applicable criteria given the engagement circumstances and shall be phrased in terms of: a. The underlying subject matter and the applicable criteria b. The subject matter information and the applicable criteria; or c. A statement made by the appropriate party.

vii. when expressed as a modified conclusion, the member’s report shall contain a. A section that provides a description of the matter(s) giving rise to

the modification; and b. A section that contains the member’s modified conclusion

n. the member’s signature; o. the date of the member’s report, which shall be dated no earlier than the

date on which the member obtained the evidence on which the member’s conclusion is based, including evidence that those with the recognised authority have asserted that they have taken responsibility for the subject matter information;

p. the location in the jurisdiction where the member practices.


Non-compliance with ASAE 3000.69/ISAE (NZ) 3000.69, ASAE 3100.80/SAE 3100.58, or ASAE 3500.83.

ASAE 3100 / SAE 3100 COMPLIANCE ENGAGEMENTS ONLY

16. Where the member has been unable to comply with the ASAEs / ISAEs due to factors outside the member’s control, they did not perform alternative procedures, included appropriate documentation in the working papers and, if appropriate, considered the implications for the member’s report.

(5) Follow Up Review Non-compliance with ASAE 3100.8/SAE 3100.8

17. The member has not met the objective of the engagement and expressed a conclusion on whether the client has complied, in all material respects, with the requirements as measured by the suitable criteria.


18. In planning the engagement, the member did not obtain an understanding of the entity’s compliance environment and document the key elements of the entity’s compliance framework.


19. Where material deficiencies were noted in the entity’s compliance framework, the member did not assess the impact on the risk of non-compliance, and the implication for planning and performing the engagement.


20. The member did not evaluate any compliance breach with the requirements as measured by the suitable criteria to determine: a. if the breach was material; and b. how it impacted on the member’s planned engagement approach for an

effective engagement.


21. Where deficiencies and/or compliance breaches came to the member’s attention, the member did not: a. evaluate, individually and in aggregate, whether they were material; and b. make the responsible party aware as soon as practicable, of such material

issues.

(5) Follow Up Review Non-compliance with ASAE 3100.64/SAE 3100.47 and ASAE 3100.68/SAE 3100.48




22. Where the member identified a matter that gave rise to a qualified, adverse, or disclaimer of conclusion, is there evidence that the member considered any obligations under the terms of the engagement to separately report such matters to the responsible party and/or the intended users of the report.


Non-compliance with ASAE 3100.87/SAE 3100.62

23. On the basis of the engagement, the member did not state an appropriate conclusion nor issued an appropriate level of assurance (unqualified; qualified; adverse; or disclaimer).


Non-compliance with ASAE 3100.84-85/SAE 3100.69-61 or ASAE 3500.89-90

ASAE 3500 PERFORMANCE ENGAGEMENTS ONLY

24. Where the member was unable to comply with the ASAEs due to factors outside the member’s control, they did not perform alternative procedures, included appropriate documentation in the working papers and, if appropriate, considered the implications for the member’s report.


25. The member has not met the objective of the engagement and expressed a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party by reporting on assertions, or information obtained directly, concerning the economy, efficiency or effectiveness of an activity against identified criteria.


26. There was evidence on file that the member initiated or accepted the engagement where, a. the activity was the responsibility of the sole intended user or the member; b. based on their preliminary knowledge of the performance engagement

circumstances, the member formed the view that: i. the requirements of the fundamental ethical principles would not be

satisfied; ii. the activity was not appropriate as a subject matter for the performance

engagement in that it was not identifiable, its performance was not capable of consistent measurement against identified criteria or assertions, and information about it was not capable of being subjected to procedures for gathering sufficient appropriate evidence;

iii. the identified criteria was not suitable; and the requirements of this ASAE or ASAE 3000 will not be satisfied; and the member was not satisfied that those persons who conducted the performance engagement collectively possessed the necessary professional and technical competencies.


27. The member concluded, during the engagement, that the subject matter was not appropriate for review or audit, or that the identified criteria was not suitable, and did not assess whether to change the terms of engagement or discontinue the engagement.


28. Where deficiencies in systems or controls and/or variations of the measures or assertions from the identified criteria came to the member’s attention, the member did not: evaluate, individually and in aggregate, whether they were material; and make the responsible party aware of such material issues.



REVIEW OF A FINANCIAL REPORT PERFORMED BY AN AUDITOR WHO IS NOT THE AUDITOR OF THE ENTITY ENGAGEMENTS Please note:



• Review of a Financial Report Preformed by an Auditor who is not the Auditor of the Entity engagements must be considered in light of the mandatory review standards contained in ASRE 2400/ISRE (NZ) 2400.




EXAMPLE REVIEW FINDINGS (ASRE 2400 / ISRE (NZ) 2400 ENGAGEMENTS)


1. Member represented compliance with ASRE 2400/ISRE (NZ) 2400 in the member’s report where they have not complied with all requirements of ASRE 2400/ISRE (NZ) 2400 relevant to the review engagement.

(5) Follow Up Review Non-compliance with ASRE 2400.20/ISRE (NZ) 2400.20

2. Member has not demonstrated compliance with the fundamental ethical principles in the Code including those pertaining to independence.


3. Member has not planned and performed the review with professional skepticism, by recognising circumstances may exist that cause the financial statements to be materially misstated, and exercised professional judgement.

(5) Follow Up Review Non-compliance with ASRE 2400.22-23/ISRE (NZ) 2400.22-23

4. Member has not taken responsibility for the overall quality of each review engagement in accordance with the firm’s quality control policies and procedures.


5. The member did not, prior to accepting a review engagement: a. consider the relevant ethical requirements including independence;

b. determine whether the financial reporting framework applied in preparation of the financial statements was acceptable including, in the case of special purpose financial statements, obtaining an understanding of the purpose for which the financial statements were prepared and of the intended users; and

c. obtain the agreement of management that it acknowledged and understood its responsibilities.

(5) Follow Up Review Non-compliance with ASRE 2400.29(b)/ISRE (NZ) 2400.29(b)

ASRE 2400.30(a)/ISRE (NZ) 2400.30(a)

ASRE 2400.30(b)/ISRE (NZ) 2400.30(b)

6. The member did not agree the terms of the engagement with the client

and/or did not include the following in their engagement letter:

a. the intended use and distribution of the financial statements, and any restrictions on use or distribution where applicable;

b. identification of the applicable financial reporting framework; c. the objective and scope of the review engagement; d. the responsibilities of the member;

e. the responsibilities of management, including those in paragraph 30(b) of ASRE 2400/ISRE (NZ) 2400;

f. a statement that the engagement is not an audit, and that the member will not express an audit opinion on the financial statements; and

g. reference to the expected form and content of the report to be issued by the member, and a statement that there may be circumstances in which the report may differ from its form and content.


7. For recurring engagements, the member did not evaluate whether circumstances, including changes in the engagement acceptance considerations, required the terms of engagement to be revised and whether there was a need to remind management of those charged with governance of the existing terms of engagement.





8. The member did not communicate on a timely basis with management, or those charged with governance, all matters of significant importance concerning the review.


9. The member did not determine materiality for the financial statements as a whole nor apply this materiality in designing the procedures and in evaluating the results obtained from those procedures.


10. The member did not obtain an understanding of the client and its environment, nor the applicable financial reporting framework, sufficient to plan, conduct, and achieve the objective of the review engagement.


11. The member did not perform enquiry and analytical procedures, which addressed all material items in the financial statements and areas in the financial statements where material misstatements were likely to arise, to obtain sufficient appropriate evidence as the basis for a conclusion on the financial statements as a whole.


12. The member did not perform procedures to address the specific circumstances: a. Accounting estimates; b. Related parties;

c. Significant , unusual or complex transactions, events or matters; d. Fraud and non-compliance with laws or regulations;

e. Subsequent events;

f. Going concern;

g. Material commitment, contractual obligations and contingencies; h. Material non-monetary transactions or transactions for no consideration i. Use of work performed by others;

j. Reconciling the financial statements to the underlying accounting records

k. Financial statements may have been materially misstated.

(5) Follow Up Review Non Compliance with: ASRE 2400.48(a)/ISRE (NZ)2400.48(a) ASRE 2400.48(b)/ISRE (NZ) 2400.48(b) & ASRE 2400.50-51/ISRE (NZ) 2400.50-51 ASRE 2400.48(c)/ISRE (NZ) 2400.48(c) ASRE 2400.48(d)/ISRE (NZ) 2400.48(d) & ASRE 2400.52/ISRE (NZ) 2400.52) ASRE 2400.48(e)/ISRE (NZ) 2400.48(e) & ASRE 2400.58-60/ISRE (NZ) 2400.58-60 ASRE 2400.48(f-g)/ISRE (NZ) 2400.48(f- g) & ASRE 2400.53-54/ ISRE (NZ) 2400.53-54)

ASRE 2400.48(h)/ISRE (NZ) 2400.48(h) ASRE 2400.48(i)/ISRE (NZ) 2400.48(i)) ASRE 2400.55/ISRE (NZ) 2400.55 ASRE 2400.56/ISRE (NZ) 2400.56 ASRE 2400.36-37/ISRE (NZ) 2400.36-37

13. The member did not obtain, or endeavour to obtain, appropriate written representations from the client’s management regarding key disclosures in relation to the review engagement.


14. The member did not express a disclaimer of conclusion, or withdraw from the engagement if withdrawal was possible under applicable law or regulation, in the instance that those charged with the client’s governance did not provide a written representation that the member considered necessary.


15. The written representations obtained have not been dated as near as practicable to, but not after, the date of the member’s report.





16. The member issued a written report that did not contain one of the following: a. a title clearly indicating that it is a report of an independent member for a

review engagement; b. an addressee, as required by the circumstances of the engagement; c. an introductory paragraph that

i. identifies the financial statements reviewed, including identification of the title of each of the statements contained in the set of financial statements and the date and period covered by each financial statement;

ii. refers to the summary of significant accounting policies and other explanatory information; and

iii. states that the financial statements have been reviewed.

d. a description of the responsibility of management for the preparation of the financial statements, including an explanation that management is responsible for:

i. their preparation in accordance with the applicable financial reporting framework including, where relevant, their fair presentation;

ii. such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error;

e. if the financial statements are special purpose financial statements:

i. a description of the purpose for which the financial statements are prepared and, if necessary, the intended users, or reference to a note in the special purpose financial statements that contains that information; and

ii. if management has a choice of financial reporting frameworks in the preparation of such financial statements, a reference within the explanation of management’s responsibility for the financial statements to management’s responsibility for determining that the applicable financial reporting framework is acceptable in the circumstances.

f. a description of the member’s responsibility to express a conclusion on the financial statements including reference to ASRE 2400/ISRE (NZ) 2400 and, where relevant, applicable law or regulation;

g. a description of a review of financial statements and its limitation, and the following statements:

i. a review engagement under ASRE 2400/ISRE (NZ) 2400 is a limited assurance engagements;

ii. the member performs procedures, primarily consisting of making enquiries of management and others within the entity, as appropriate, and applying analytical procedures, and evaluates the evidence obtained; and

iii. the procedures performed in a review are substantially less than those performed in an audit conducted in accordance with Australian Auditing Standards, and accordingly, the member does not express an audit opinion on the financial statements;

h. a paragraph under the heading “Conclusion” that contains:

i. the member’s conclusion on the financial statements as a whole in accordance with paragraphs 75-85 of ASRE 2400/ISRE (NZ) 2400, as appropriate; and

ii. a reference to the applicable financial reporting framework used to prepare the financial statements, including, if applicable, identification of the jurisdiction of origin of the financial reporting framework;

i. when the member’s conclusion on the financial statements is modified:

i. a paragraph under the appropriate heading that contains the member’s modified conclusion in accordance with paragraphs 72 and 75-85 of ASRE 2400/ISRE (NZ) 2400, as appropriate; and

ii. a paragraph, under an appropriate heading, that provides a description of the matter(s) giving rise to the modification;

j. a reference to the member’s obligation under ASRE 2400/ISRE (NZ) 2400 to comply with relevant ethical requirements;

k. the date of the member’s report; l. the member’s signature; and m. the location in the jurisdiction where the member practices.





17. The member did not:

a. prepare review documentation that is sufficient and appropriate to provide a basis for the member’s conclusion, and to provide evidence that the review was performed in accordance with the relevant standard and, if applicable, legal and regulatory requirements;

b. document the nature, timing and extent of procedures performed, as required by ASRE 2400/ISRE (NZ) 2400, recording who performed the work and the date such work was completed and who reviewed the work performed for the purpose of quality control for the engagement and the date and extent of the review;

c. document discussions with management, those charged with governance, and others as relevant to the performance of the review of significant matters arising during the engagement, including the nature of those matters; and/or

d. document how any inconsistencies were addressed if, in the course of the engagement, the member identified information that was inconsistent with the member’s findings regarding significant matters affecting the financial statements.


ASRE 2400.93/ISRE (NZ) 2400.93

ASRE 2400.94/ISRE (NZ) 2400.94 ASRE 2400.95/ISRE (NZ) 2400.95

ASRE 2400.96/ISRE (NZ) 2400.96


REVIEW OF HISTORICAL FINANCIAL INFORMATION OTHER THAN A FINANCIAL REPORT Please note:



• Review of Historical Financial Information other than a Financial Report engagements must be considered in light of the mandatory review standards contained in ASRE 2405.




EXAMPLE REVIEW FINDINGS (ASRE 2405 ENGAGEMENTS)


1. Member has not demonstrated compliance with the fundamental ethical principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

(5) Follow Up Review Non-compliance with ASRE 2405.8



3. Member did not obtain sufficient appropriate evidence primarily through enquiry and analytical procedures to for the purpose of expressing limited assurance in the review report.


4. Member has not agreed the terms of the engagement with the client in writing.


5. Member has not planned the review including obtaining or updating their knowledge of the business so that an effective engagement was performed.

(5) Follow Up Review Non-compliance with ASRE 2405.25-26

6. Member used work performed by another assurance practitioner or expert, and there is evidence that the member was not satisfied that such work was adequate for the purposes of the review.


7. The member did not a. apply judgement in determining the specific nature, timing and extent of

review procedures.

b. consider materiality, using professional judgement, when determining the nature, timing and extent of review procedures and evaluating the effect of misstatements.


ASRE 2405.29

ASRE 2405.31

8. Member did not enquire about events subsequent to the date of the historical financial information that may have required adjustment of, or disclosure in, the historical financial information.


9. Member believed the historical financial information may have been materially misstated and did not carry out additional or more extensive procedures that enabled them to express a limited assurance conclusion or to confirm a modified report was required.


10. Member did not evaluate, individually and in the aggregate, whether uncorrected misstatements that had come to their attention were material to the historical financial information.





11. Member did not obtain written representations from management that: a. they acknowledged their responsibility for the design and implementation of

internal control to prevent and detect fraud and error;

b. the historical financial information is prepared and presented in accordance with the applicable criteria;

c. they believe the effect of uncorrected misstatements aggregated by the member during the review are immaterial to the historical financial information;

d. they have disclosed to the member all significant facts relating to any fraud(s) or suspected fraud(s) known to them that may have affected the entity;

e. they have disclosed to the member the results of the assessment of risk that the historical financial information may be materially misstated as a result of fraud;

f. they have disclosed to the member all known actual or possible non-compliance with laws and regulations the effects of which were considered when preparing the historical financial information; and

g. they have disclosed to the member all significant events that have occurred subsequent to the date of the historical financial information and through to the date of the review report, that may have required adjustment to or disclosure in the historical financial information.


12. Member did not read the other information that accompanied the historical financial information to consider any material inconsistencies nor, if appropriate, discussed these inconsistencies with the entity’s management.

(5) Follow Up Review Non-compliance with ASRE 2405.45 and ASRE 2405.48

13. Member believed it necessary to make a material adjustment to the historical financial information and did not communicate this to the appropriate level of management nor, where management did not respond within a reasonable period of time, those charged with governance.

(5) Follow Up Review Non-compliance with ASRE 2405.50-51

14. Member did not communicate to those charged with governance any matter which came to the member’s attention that caused the member to believe in the existence of fraud or non-compliance by the entity with laws and regulations, nor did the member consider the implication thereof for the review.

(5) Follow Up Review Non-compliance with ASRE 2405.54 and ASRE 2405.56

15. Member issued a report that did not contain the following: h. title; i. addressee; j. opening or introductory paragraph including;

i. identification of the historical financial information on which the review has been performed;

ii. a statement of the responsibility of those charged with governance of the client, including the identification of the applicable criteria, and the responsibilities of the member; and

iii. a statement, where appropriate, that the historical financial information has been prepared for a particular purpose and user(s), and any express restriction on the distribution of the review report or on those entitled to rely on it;

k. paragraph describing the nature of a review, including: i. a statement that the review is conducted in accordance with ASRE 2405;

ii. a statement that a review is limited primarily to enquiries and analytical procedures; and

iii. a statement that an audit has not been performed, that the procedures undertaken provide less assurance than an audit and that an audit opinion is not expressed;

l. a conclusion of limited assurance; m. date of the review report; n. the member’s address; and o. the member’s signature.





16. The review report does not: p. state a conclusion that nothing came to the member’s attention that caused

the member to believe that the historical financial information was not prepared, or presented fairly, in all material respects in accordance with the applicable criteria; or

q. where matters came to the member’s attention, describe those matters that caused the member to believe that the historical financial information was not prepared, or presented fairly, in all material respects in accordance with the applicable criteria, including, unless it was impracticable, a quantification of the possible effect(s) on the historical financial information and either expressed a qualification of the limited assurance provided, or, where the effect of the matter was so material and pervasive that a qualification was not adequate express an adverse conclusion; or

r. where there has been a material scope limitation, describe the limitation and either expressed a qualification of the limited assurance provided regarding possible adjustments to the historical financial information that may have been determined necessary had the limitation not existed, or, where the possible effect of the limitation was so significant and pervasive that the member concluded that no level of assurance could be provided, not provide any assurance; and

s. where it was considered necessary by the member, include an emphasis of matter section, suitably headed and placed immediately after the review conclusion.


17. The date of the review report is not the date the review was completed and is earlier than the date on which the historical financial information was approved by the client’s management.


18. The member did not prepare review documentation that is sufficient and appropriate to provide a basis for the member’s conclusion, and to provide evidence that the review was performed in accordance with ASRE 2405 nor, if applicable, legal and regulatory requirements



REVIEW OF A FINANCIAL REPORT PERFORMED BY THE INDEPENDENT AUDITOR OF THE ENTITY Please note:



• Review of a Financial Report Performed by the Independent Auditor of the Entity engagements must be considered in light of the mandatory review standards contained in ASRE 2410 / NZ SRE 2410.




EXAMPLE REVIEW FINDINGS (ASRE 2410 / NZ SRE 2410 ENGAGEMENTS)


1. Member has been unable to comply with an essential procedure contained within a relevant requirement of ASRE 2410 / NZ SRE 2410, due to factors outside the member’s control and did not perform alternative procedures, included appropriate documentation in the working papers nor, if appropriate, considered the implications for the review report.

(5) Follow Up Review Non-compliance with ASRE 2410.7 / NZ SRE 2410.7

2. Member has not demonstrated compliance with the relevant ethical requirements relating to the audit of the annual financial report of the entity.


3. Member has not member implemented quality control procedures that are applicable to the individual engagement.


4. Prior to agreeing the terms of engagement, the member did not determine whether the financial reporting framework was acceptable and obtain agreement with the client that it acknowledged and understood its responsibilities.


5. Member did not agree the terms of the engagement with the client in writing. (5) Follow Up Review Non-compliance with ASRE 2410.12 / NZ SRE 2410.13

6. Member did not obtain an understanding of the entity and its environment, including its internal controls, as it related to the preparation of both the annual and interim or other financial reports suffice to plan and conduct the engagement.

(5) Follow Up Review Non-compliance with ASRE 2410.13-14 / NZ SRE 2410.14-15

7. Member did not consider materiality, using professional judgement, in determining the nature, timing and extent of review procedures, nor in evaluating the effect of uncorrected misstatements and whether uncorrected misstatements were material to the financial report.

(5) Follow Up Review Non-compliance with ASRE 2410.15 / NZ SRE 2410.16 and ASRE 2410.22 / NZ SRE 2410.23

8. Member did not make enquiries and perform analytical and other review procedures to enable the member to conclude whether anything has come to their attention that caused them to believe that the financial report was not prepared, in all material respects, in accordance with the applicable accounting framework.


9. The member did not: a. obtain evidence that the financial report agrees or reconciles with the

underlying accounting records.

b. enquire whether management had identified all events up to the date of the review report that may have required adjustment to or disclosure in the financial report.

c. enquire whether those charged with governance had changed their assessment of the entity’s ability to continue as a going concern.

d. make additional enquiries or perform other procedures to enable them to express a conclusion in the review report in the instance where a matter came to their attention that lead them to question whether a material adjustment needed to be made for the financial report to be prepared.


ASRE 2410.17 / NZ SRE 2410.18 ASRE 2410.18 / NZ SRE 2410.19

ASRE 2410.19 / NZ SRE 2410.20 ASRE 2410.20 / NZ SRE 2410.21




10. Where comparative information was included in the financial report for the first time the member did not perform similar procedures on the comparative information as applied to the current period financial report.


11. The member did not endeavor to obtain written representations from management nor, where appropriate, those charged with governance, that:

a. they acknowledged their responsibility for the design and implementation of internal control to prevent and detect fraud and error;

b. the financial report was prepared and presented in accordance with the applicable financial reporting framework;

c. they believed the effect of those uncorrected misstatements aggregated by the member during the review were immaterial;

d. they disclosed to the member all significant facts relating to any frauds or suspected frauds known to them that may have affected the entity;

e. they disclosed to the member the results of their assessment of the risk that the financial report may have been materially misstated as a result of fraud;

f. they disclosed to the member all known actual or possible non-compliance with laws and regulations, the effects of which were considered when preparing the financial report; and

g. they disclosed to the member all significant events that had occurred subsequent to the balance sheet date and through to the date of the review report that may have required adjustment to or disclosure in the financial report.


12. Management and those charged with governance refused to provide a written representation that the member considered necessary and the member did not express a qualified conclusion or a disclaimer of conclusion.


13. Member has not read the other information that accompanied the financial report to consider any material inconsistencies nor, if a matter came to the member’s attention that caused them to believe that the other information included a material misstatement, did they discuss the matter with the entity’s management and (where appropriate) those charged with governance.


14. The member did not: a. communicate to the appropriate level of management when they

considered it necessary to make to a material adjustment to the financial report for it to have been prepared?

b. communicate to those charged with governance if management didn’t respond within a reasonable period of time?

c. communicate to those charged with governance a matter that caused the member to believe in the existence of fraud or non-compliance by the entity with laws and regulations, and consider the implications thereof for the review?

d. communicate relevant matters of governance interest that arose from the review of the financial report to those charged with governance.

(5) Follow Up Review Non-compliance with ASRE 2410.27 / NZ SRE 2410.28 ASRE 2410.28 / NZ SRE 2410.29 ASRE 2410.30 / NZ SRE 2410.31

ASRE 2410.31 / NZ SRE 2410.32




15. The member issued a written report that did not contain the following: a. an appropriate title clearly identifying it as a review report of the

independent auditor of the entity; b. an addressee, as required by the circumstances of the engagement;

c. identification of the financial report reviewed including identification of the title of each of the statements contained in the financial report and the date and period covered by the financial report;

d. a statement that those charged with governance are responsible for the preparation and fair presentation of the financial report in accordance with the applicable financial reporting framework;

e. a statement that the member is responsible for expressing a conclusion on the financial report based on the review;

f. a statement that the review of the financial report was conducted in accordance with ASRE 2410 / NZ SRE 2410, and that that Auditing Standard requires the auditor to comply with ethical requirements relevant to the audit of the annual financial report;

g. a statement that a review consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures;

h. a statement that a review is substantially less in scope than an audit conducted in accordance with Auditing Standards and consequently does not enable the member to obtain assurance that the member would become aware of all significant matters that might be identified in an audit and that accordingly no audit opinion is expressed;

i. a conclusion as to whether anything has come to the member’s attention that causes the member to believe that the financial report does not present fairly, or if applicable, is not true and fair, in all material respects, in accordance with the applicable financial reporting framework (including a reference to the jurisdiction or country of origin of the financial reporting framework when Australia is not the origin of the financial reporting framework used);

j. the date of the member’s review report;

k. the location in the country or jurisdiction where the member practices; and

l. the member’s signature.


16. The member did not express a qualified or adverse conclusion, as appropriate, when a matter came to the member’s attention that caused the member to believe that a material adjustment should have been made to the financial report for it to be prepared, in all material respects, in accordance with the applicable financial reporting framework, and those charged with the client’s governance did not correct the financial report.


17. The member was unable to complete the review and did not communicate, in writing, the reasons to the client’s management and those charged with governance, nor considered the appropriateness of issuing a review report or withdrawing from the engagement.


18. The member accepted or, after accepting, completed a review engagement where management had imposed a limitation of scope.


19. The member did not express a qualified opinion where there was a limitation on the scope of the member’s work that was confined to one or more specific matters, which while material, was not in the member’s judgement pervasive to the financial report and when the member concluded that an unqualified opinion cannot be expressed.





20. The member did not a. add an emphasis of matter paragraph to the review report to highlight a

material uncertainty relating to an event or condition that casts significant doubt on the entity’s ability to continue as a going concern, of which adequate disclosure was made in the financial report.

b. express a qualified or adverse conclusion where a material uncertainty cast significant doubt on the entity’s ability to continue as a going concern was not adequately disclosed in the financial report.

c. consider adding an emphasis of matter paragraph to highlight a significant uncertainty, other than a going concern problem, the resolution of which depended on future events that may materially affect the financial report.

d. express a qualified or adverse conclusion, as appropriate, where a significant uncertainty (other than a going concern problem) was not adequately disclosed in the financial report.

(5) Follow Up Review Non-compliance with ASRE 2410.40 / NZ SRE 2410.41 ASRE 2410.41 / NZ SRE 2410.42 ASRE 2410.39 / NZ SRE 2410.40

ASRE 2410.39 / NZ SRE 2410.40

21. The member did not prepare review documentation that is sufficient and appropriate to provide a basis for the member’s conclusion, and to provide evidence that the review was performed in accordance with ASRE 2410 and, if applicable, legal and regulatory requirements.



REVIEW OF A FINANCIAL REPORT – COMPANY LIMITED BY GUARANTEE/ENTITY REPORTING UNDER THE ACNA ACT/ENTITY REPORTING UNDER OTHER APPLICABLE LEGISLATION OR REGULATION Please note:



• Review of a Financial Report – Company Limited by Guarantee/Entity Reporting Under the ACNA Act/Entity Reporting under other Applicable Legislation or Regulation engagements must be considered in light of the mandatory review standards contained in ASRE 2415.






1. Member has not demonstrated compliance with the relevant ethical requirements relating to the review of the financial report.





REVIEW OF FINANCIAL PLANNING SERVICES ENGAGEMENTS Please note:



• Review of Financial Planning Services engagements must be considered in light of the mandatory professional requirements contained in APES 230.




EXAMPLE REVIEW FINDINGS (FINANCIAL PLANNING)


1. There is evidence in the compliance report/file(s) reviewed that the member had not performed their engagements in accordance with the fundamental responsibilities including Best Interest of the Client as required by Division 7.7A of Corporations Act 2001.



2. There is evidence in the compliance report/file(s) reviewed that the member has not complied with Professional Independence as defined in APES 230 and, where applicable (ie the member has held themselves out to be an independent adviser), the independence requirements contained in laws or regulations, such as s.923A of Corporations Act 2001.



3. There is evidence in the compliance report/file(s) reviewed that the where the member provided a Financial Planning Service that was restricted in scope, including where the Financial Planning Service was restricted to particular areas, financial products or providers, the Member had not disclosed the extent of those restrictions and any resulting effect on the Member’s objectivity and Professional Independence: a. prior to undertaking the Financial Planning Service; and b. at the time the Financial Planning Service was provided to the Client.



4. There is evidence in the compliance report/file(s) reviewed that the member had not documented and communicated to their client(s) the terms of engagement to provide the Financial Planning Service in accordance with the Financial Planning Service in accordance with APES 305 Terms of Engagement and APES 230.



5. Member does not have a documented process to disclose in a written form to their Client(s) or a prospective Client, before commencing a Financial Planning Service, the following terms of engagement and/or did not obtain the Client’s written agreement to such terms:

a. the identity of the person or the entity responsible for providing the Financial Planning Service;

b. the nature and scope of Financial Planning Services to be provided or offered including any limitations of scope;

c. significant factors that affect or may affect the Member’s ability to provide the Financial Planning Service to the Client on an objective and independent basis;

d. the details of the professional fees, including the basis on which the fees are determined and the services covered by the fees;

e. information about any actual, potential or perceived conflicts of interest that have the potential to affect the Member’s ability to act in the Best Interests of the Client;

f. where the Member has adopted safeguards to eliminate or reduce to an Acceptable Level any identified conflicts of interest or other threats to the Member’s ability to comply with the fundamental principles of the Code, information about the nature of those safeguards and an explanation of the reasons why the Member considers those safeguards to be effective;

g. the need for the Member to obtain the Client’s written Informed Consent, where the Member is to be remunerated for a Financial Planning Service in accordance with paragraphs 8.2(b) or 9.2(b); and






5. Continued…. h. information about the nature and extent of any interests, associations or

relationships, including family, contractual or agency relationships, whether of a financial nature or otherwise, that have the potential to affect the Member’s ability to act in the Best Interests of the Client.



6. There is evidence in the compliance report/file(s) reviewed that the member had not established the basis for the Financial Planning Advice provided with reference to:

a. information provided by the Client or agreed by the Client where otherwise sourced; and

b. the Member’s evaluation of various strategies and courses of action that could reasonably be expected to meet the Client’s objectives, financial situation and needs, including the relative effectiveness of the various strategies and courses of action.



7. There is evidence in the compliance report/file(s) reviewed that the member had not analysed and evaluated the Client’s relevant circumstances that existed at the time of providing the advice nor taken reasonable steps to ensure that the Financial Planning Advice took into consideration:

a. the agreed scope of the Financial Planning Advice including any limitations of scope;

b. the Client’s objectives, financial situation and needs, and other relevant circumstances; and

c. significant assumptions used to develop the Financial Planning Advice.



8. There is evidence in the compliance report/file(s) reviewed that the member had not gathered sufficient appropriate evidence by such means as inspection, inquiry, computation and analysis to enable them to establish a reasonable basis for Financial Planning Advice and when they determined the extent and quality of evidence necessary, the Member had not exercised professional judgment, considered the nature of the Financial Planning Advice and the Member’s understanding of the Client’s objectives, financial situation and needs, and other relevant circumstances.



9. The member does not have a documented process which informs the Client(s) of all significant assumptions and their sensitivities that were reasonably expected to impact upon the Financial Planning Advice, that they would agree with the Client to the extent practicable all significant assumptions and their sensitivities that may have impacted upon the advice taking into consideration the Client’s relevant circumstances nor that they would document the significant assumptions they would use to prepare the advice.



10. The member does not have a documented process that where they used estimates, forecasts or projections in the Financial Planning Advice, they would ensure that those estimates, forecasts or projections were presented and communicated in a manner that would avoid the implication of greater certainty that would have in fact existed.



11. There is evidence in the compliance report/file(s) reviewed that the member provided Financial Planning Advice where the information on which the Financial Planning Advice was based on contained false or misleading information or omitted material information.



12. The member’s template report (Statement of Advice) to be issued to a client in written form did not include: a. the name of the party engaging the Member; b. the date of the report; c. the purpose of the Financial Planning Advice;

d. the name and qualifications of the Member(s) responsible for the Financial Planning Advice;

e. the scope of the Financial Planning Advice, including any limitations or restrictions;

f. the basis of the Financial Planning Advice, including all significant assumptions on which the Financial Planning Advice is based;

g. the specific information on which the Member has relied and the extent to which it has been reviewed by the Member;

h. the reasons why the Financial Planning Advice is considered to be in the Best Interests of the Client;

i. the amount of the fee received or receivable by the Member, either from the Client or a third party, for the Financial Planning Advice; and

j. that the Financial Planning Advice was provided in accordance with APES 230.






13. The member has a Managed Discretionary Account authority to transact on behalf of the client and they have not complied with APES 310 Dealing with Client Monies.

Referral to Professional Conduct


14. The member did not take reasonable steps to protect the security of a Client’s information and property that was within their control in accordance with applicable law, regulations and APES 230.



15. The member does not have a process to return a Client’s property, including records, to the Client upon request, or in accordance with the terms of the Financial Planning Service.



16. There is evidence in the compliance report/file(s) reviewed that the member had not eliminated or reduced to an Acceptable Level the threats to the fundamental principles of the Code described in paragraph 8.1 by either: a. the Member charging a professional fee on a Fee for Service basis; or

b. where the Member charged a professional fee solely determined or based on a percentage of the value of the Client’s assets or funds under management1, the Member;

i. obtained, prior to the commencement of the Financial Planning Service, written Informed Consent from the Client to charge and collect the professional fee on a percentage basis;

ii. disclosed on an annual basis to the Client the amount collected for the Financial Planning Service and provided an explanation for any significant variation from previously advised fees; and

iii. obtained thereafter on at least a biennial basis written consent from the Client to continue to charge and collect the professional fee on a percentage basis.



17. The member does not have a process where a material change is made to the basis upon which they charged professional fees, the Member will notify the Client and obtain the Client’s written consent to the amend terms in accordance with APES 305 Terms of Engagement.



18. The member does not have a process which eliminates or reduces to an Acceptable Level the threats to the fundamental principles of the Code described in paragraph 9.1 by either: a. the Member charging a professional fee on a Fee for Service basis; or

b. where the Member will be remunerated by Third Party Payments, the Member; i. will obtain, prior to the commencement of the Financial Planning

Service, written Informed Consent from the Client for the receipt of those Third Party Payments;

ii. will disclose to the Client three comparative quotes, where available, in respect of Financial Planning Advice on new contracts for life insurance and other risk products and the procurement of new loans;

iii. will disclose on an annual basis to the Client the amount or estimated amount of Third Party Payments to be received for the Financial Planning Service;

iv. will disclose on an annual basis to the Client the amount of the Third Party Payments received for the Financial Planning Service; and

v. where applicable, will disclose to the Client the impact of any proposed changes to existing life insurance, other risk contracts and loans including the impact on Third Party Payments received or receivable by the Member as a result of recommending changes to these contracts and loans.



19. The Member provided a Financial Planning Service in respect of life insurance, other risk contracts and the procurement of loans and was remunerated on a Fee for Service basis in accordance with paragraph 9.2(a) and there is no evidence of a process which fully rebates to the Client any Third Party Payments received as soon as is practicable nor, in the instance a Third Party Payment is unable to be related specifically to an individual Client, is there evidence of a process which apportions the amount amongst all relevant Clients in a fair and reasonable manner.



20. The Member has accepted Soft Dollar Benefits in relation to a Financial Planning Service provided by them.






21. The member has not prepared working papers in accordance with APES 230 that documents the work performed, including aspects of the Financial Planning Services that have been provided in writing, including:

a. providing a sufficient and appropriate record of the procedures performed for the Financial Planning Services;

b. evidence that the work undertaken provides a reasonable basis for Financial Planning Advice, including any recommendations accompanying the Financial Planning Advice;

c. demonstrating that the Financial Planning Services were carried out in accordance with APES 230 and other applicable Professional Standards, and ethical, legal and regulatory requirements; and

d. evidence all relevant information concerning the Member’s professional relationship with the Client, including:

i. sufficient information to evidence that the Member has acted in the Best Interests of the Client; and

ii. information about how the Member has disclosed and addressed any threats or conflicts of interest arising in the course of the Client relationship or the Financial Planning Services.

(5) Follow Up Review Non-compliance with APES 230.11.1


FORENSIC ACCOUNTING SERVICES Please note:

• Reviewers must consider all aspects of the Member’s system of quality control and its implementation, and may identify matters not addressed in these guidelines

• When in doubt as to the type of report to issue in a particular set of circumstances, Reviewers are requested to contact the Quality Review Department directly to seek advice

• Forensic accounting engagements must be considered in light of the mandatory professional standards contained in APES 215

• The report type suggested in each instance below is the type that should be issued by a Reviewer in such an instance. The Quality Review Department will consider each recommendation and may change the type of report issued to a Member at its discretion the Quality Review Department on considering the report prepared by the Reviewer in conjunction with the Member’s comments, may change the type of the report

• Forensic accounting services tend to be higher risk services

• This is all based on the definition provided in APES 215


EXAMPLE REVIEW FINDINGS (FORENSIC ACCOUNTING)

REPORT TYPE

EXPLANATION – TO BE INCLUDED IN REPORT ON MEMBER’S COMPLIANCE STANDARD


(4) Evidence of

Compliance

Non-compliance with APES 320.58 and APES 215.7.1

2. Member has not observed and complied with the fundamental responsibilities of members in public practice, as outlined in APES 110 Code of Ethics for Professional Accountants (“the Code”) and relevant legislation.


Non compliance with APES 215 and APES 110

3. Member has not taken all reasonable steps to avoid a position of conflict

or to adequately resolve the conflict or perceived conflict.

(3) Representation for Compliance or


Non-compliance with APES 215.3.4 and APES 110.220

4. Member’s professional independence has or appears to have been compromised by acceptance of the engagement.



5. Member has not complied with independence requirements for assurance engagements.

(5) Follow up Review Non compliance with

APES 215.3.7 and APES 110.291

6. Member has provided professional services to a client that are related to, and in conflict with the objectives of, an Expert Witness Service.



7. Where the Member was not adequately qualified or experienced to undertake the engagement, the Member did not decline the engagement, or seek expert assistance and make the relevant disclosures.



8. Member did not document and communicate the terms of engagement in accordance with APES 305.


Non compliance with APES 215.4.1 and APES 305

9. Member did not comply with professional appointment requirements when approached by a potential client.

(5) Follow up Review Non compliance with

APES 215.4.2 and APES 110.210

10. Member has knowingly or recklessly been associated with a statement that, by its content or by an omission, is false or misleading.






12. Member’s professional fee has not been computed in accordance with the Code.


Non compliance with APES 215.8.1 and APES 110.240

13. Member entered into a contingent fee arrangement, or received a contingent fee, where independence was required, or where the Member purported to be independent.




EXAMPLE REVIEW FINDINGS (FORENSIC ACCOUNTING)

REPORT TYPE


EXPERT WITNESS SERVICES ONLY

14. Member did not disclose matters in the Member’s report that assisted the Court to assess the degree of the Member’s Independence.



15. Member expressed an opinion that was based on the work of another expert and did not disclose the basis of that opinion in the report.



16. Member provided Expert Witness Services to a client where the services were related to, and in conflict with the objectives of, another professional service.



17. Member did not comply with their relevant duties to the Court, to independence, or to professional competence.



18. Member’s report did not clearly communicate the required components. (4) Evidence

of Compliance


19. Member became aware that an opinion was based on information that was false, misleading or contained material omissions, and that situation was not appropriately disclosed.



20. Member entered into a contingent fee arrangement or received a contingent fee.




INSOLVENCY SERVICES Please note:



• Insolvency engagements must be considered in light of the mandatory professional standards contained in APES 330.




EXAMPLE REVIEW FINDINGS (INSOLVENCY)

REPORT TYPE



(4) Evidence of

Compliance

Non-compliance with APES 320.58, APES 330.9.1



Non-compliance with APES 330.3.1, APES 330.3.2 and APES 110.110

3. Member has advised an insolvent entity on how to cause assets to be unavailable in an administration or to otherwise avoid the consequences of the insolvency.



4. Prior to accepting the engagement, the Member did not ensure they have

the capacity or access to the necessary resources to conduct the proposed administration in an effective and efficient manner.





5. Member has not maintained professional competence, taken due care and acted in a timely manner in the performance of the member’s work.



6. Member did not act professionally and co-operatively, compromising the member’s obligations in the member’s appointment, when dealing with other practitioners in transitioning appointments or where there were parallel appointments.



7. Member did not seek expert assistance or advice from a suitably qualified third party, or decline the insolvency service where required.



8. Member did not assess the professional competence and objectivity of a third party’s work, the appropriateness and reasonableness of the work performed, or the professional fees charged.



9. Member did not take all reasonable steps to communicate with entities affected by an administration in a timely and clear manner as to the insolvency processes and the rights and obligations of the entities.



10. Member has used confidential information, acquired in the course of an insolvency service, for a purpose other than the proper performance of that insolvency service.

(4) Evidence of

Compliance


11. Member has not complied with Section 250 Marketing Professional Services of the Code.



12. Member used an advertisement in respect of an administration to market the member’s professional services.



13. Member used slogans, logos, claims about the members firm,

or other promotional material in statutory advertisements.


(5) Follow Up review


14. Member did not maintain independence in accordance with APES 330.4.2 when accepting an appointment or conducting an administration.






REPORT TYPE


15. Member did not identify, evaluate, and address threats to the independence of the member, prior to accepting an appointment.




16. Member did not act impartially or ensure that the member’s personal interests did not conflict with the duty to the creditors.



17. Member did not take reasonable steps to identify and evaluate any threats created by the firm’s interests and relationships with the insolvent entity.



18. Member accepted an appointment where an inappropriate relationship existed.



19. Member did not evaluate any threats a prior relationship was likely to create to independence or determine whether a reasonable person would conclude there were significant threats to independence.



20. Member did not evaluate any threats to independence and, when necessary, apply safeguards to eliminate or reduce them to an acceptable level or decline the appointment where member, had a controlling interest in, or the ability to influence, a business operating in the same, or principally the same market as the insolvent entity.



21. Member accepted an appointment , other than to be controller, despite also providing a material professional service to the insolvent entity within the last 2 years.



22. Member did not evaluate any relationships which the insolvent entity had with the firm or previous firm(s) in the preceding two years in accordance with the requirements of APES 330 where two or more firms or network firms had merged.

(3) Representation

of Compliance


23. Member did not evaluate any relationships which the insolvent entity had with the previous firm during the time that the member was a partner where the member considered accepting an appointment and had moved firms in the preceding two years. Member did not disclose the relationships in the Declaration of Independence, Relevant Relationships and Indemnities where there were prior relationships and where the prior relationships posed significant threats to independence and there were no safeguards that could eliminate the threats or reduce them to an acceptable level, the member did not decline the appointment.




24. Member provided advice to both an insolvent entity and the insolvent entity’s directors in their personal capacity.



25. Member accepted an appointment where the member, the member’s firm, a network firm or their partners provided a material or professional service to the insolvent entity or any other entity which:

• Has reasonable potential to lead to litigation claims against the Member or the Member’s Firm by a stakeholder of the Administration;

• Is material to the Administration; or

• Was related to the structuring of assets of the insolvent Entity in order to avoid the consequences of insolvency, even if that advice was provided at a time when the Entity was solvent.



26. Member provided an inducement to an entity to secure an appointment for the member or to secure or prevent the appointment or nomination of another person.

(3) Representation

of Compliance


27. Member accepted an appointment or performed an administration that involves an inappropriate fee or referral.



28. Member did not provide a Declaration of Independence and Relevant Relationships and Indemnities in the first communication to the creditors and table it at the first meeting of the creditors.

(3) Representation

of Compliance


29. Member did not include the necessary items in the Declaration of Independence and Relevant Relationships and Indemnities.



30. Member did not evaluate any threats to independence that were identified

after the commencement of an administration, or member did not take necessary action.







REPORT TYPE


31. Member became aware that the Declaration of Independence and Relevant Relationships and Indemnities was out of date or inaccurate, and the member did not update or distribute the Declaration appropriately.

(3) Representation

of Compliance


32. Member did not make the appropriate notices and disclosures when requested by an insolvent entity, its directors or its creditors to consent to an appointment to replace another person who had Commenced the administration.

(3) Representation

of Compliance


33. Member’s firm did not have established policies and procedures which prohibited relevant parties from acquiring or deriving a benefit from dealing with any assets due to an appointment, without obtaining the prior approval of the court.

(4) Evidence of

Compliance


34. Member purchased property or other assets of an administration without obtaining prior approval of the court.



35. Member did not take all reasonable steps to ensure that the member did not knowingly sell property or other assets of an administration to related parties without obtaining prior approval of the court.



36. Member acted as an expert witness during the course of an administration and did not comply with relevant duties.



37. Member acted as an expert witness during the course of an administration and did not clearly communicate relevant details in a witness report.



38. Member was not remunerated for performing the administration by way of professional fees in accordance with Section 240 Fees and other Types of Remuneration of the Code.



39. Member claimed professional fees and expenses for an administration which were not necessary and proper.



40. The member did not claimed any fees for insolvency services provided by the member, the member’s firm or a third party to the administration as professional fees.

(3) Representation

of Compliance


41. Member did not use commercial judgement when incurring expenses for the administration.



42. Member made a claim in respect of professional fees for Pre-appointment work performed without obtaining court approval.



43. Member entered into an arrangement to receive a contingent fee for insolvency services that:

• impairs the Member’s Independence;

• results in the receipt of a Contingent Fee for performing professional work that the Member is required to complete under the relevant legislation governing an Appointment;

• is inconsistent with the fiduciary obligations of the Member; or

• results in the perception that the Member is acting in the Member’s interests, rather than in the best interests of the creditors.




44. Member did not consider all factors as required in APES 330.8.9 when they considered whether a proposed contingent fee arrangement in a particular administration met the requirements of APES 330.8.8.



45. Member entered into an arrangement to receive a contingent fee for insolvency services without obtaining approval from the approving body prior to commencement of professional services.

(3) Representation

of Compliance


46. Member did not provide relevant information in the first communication to creditors after accepting an appointment.



47. Member did not provide the creditors with the relevant additional information where the basis upon which professional fees for the administration was time based.

(3) Representation

of Compliance


48. Member did not provide sufficient information so as to allow the approving body to make an informed assessment as to whether the remuneration was reasonable.

(4) Evidence of

Compliance




REPORT TYPE


49. Member drew professional fees prior to the proper resolution, order, or authority had been obtained from the approving body or outside the terms of approval.


Compliance with APES 330.8.14

50. Member did not draw the correct fixed fee at the conclusion of the administration or in amounts and at milestones specified by the approving body.

(3) Representation

of Compliance


51. Member did not specify the maximum amount of the professional fees that may be drawn before requiring further approval from the approving body.



52. Member did not ensure appropriate disclosures and approvals were made where the member received monies prior to acceptance of an appointment to meet the costs of the proposed administration.

(3) Representation

of Compliance


53. Member has not prepared working papers in accordance with APES 330 that appropriately document the work performed.




VALUATION SERVICES ENGAGEMENTS Please note:



• Valuation services engagements must be considered in light of the mandatory professional standards contained in APES 225.




EXAMPLE REVIEW FINDINGS (VALUATION SERVICES)

REPORT TYPE



(4) Evidence of

Compliance


2. Member has not complied with the fundamental principles of the code or with relevant legislation


APES 225 and APES 110

3. Member has not been both independent of mind and independent in appearance when services require independence, or which purport to be independent.



4. Member has acted as an advocate in respect of a valuation service which requires independence, or which purports to be independent.



5. Member did not seek expert assistance or advice on matters considered to be outside the member’s professional expertise, or did not disclose the extent of reliance upon such advice in the report.




6. Member did not assess the professional competence and objectivity of a third party or the appropriateness and reasonableness of the work performed by that party.



7. Member conveyed information about a client’s or employer’s affairs to

a third party without the client’s or employer’s permission




8. Member has provided confidential information in accordance with a legal obligation of disclosure, but did not notify the client, employer or relevant third party as soon as practicable.

(3) Representation

of compliance


9. Member has not documented and communicated the terms of engagement

when providing professional services to Clients.




10. Member did not obtain the prior consent of a third party prior to disclosing the opinion or the name of that party.



11. Member did not gather sufficient and appropriate evidence to provide reasonable grounds that the valuation report and the conclusions therein were properly supported. And/or there’s no evidence that the member exercised professional judgement when determining the extent and quality of evidence necessary, considering the nature of the valuation, the type of valuation service and the use to which the valuation report would be put.



12. Report prepared does not clearly communicate all required elements.

(2) Requirements for Compliance

or



13. Member has not documented the oral report communication, the reasons for issuing an oral report, or the work performed.



14. Member did not consider the inclusion of appropriate information in the valuation report.



15. Member has not appropriately documented the work performed.




EXAMPLE REVIEW FINDINGS (VALUATION SERVICES)

REPORT TYPE


16. Member has not clearly defined the valuation terms used in the valuation report.



17. Member was remunerated via a contingent fee arrangement for a valuation service which required independence or purported to be independent.




PROSPECTIVE FINANCIAL INFORMATION Please note:



• Reporting service engagements must be considered in light of the mandatory professional standards contained in APES 345.




EXAMPLE REVIEW FINDINGS (PROSPECTIVE FINANCIAL INFORMATION)

REPORT TYPE



(4) Evidence of

Compliance


2. Member has not complied with the fundamental principles of the Code or with relevant legislation

(5) Follow up Review Non-compliance with

APES 345 and APES 110

3. Member has not taken all reasonable steps to avoid a position of conflict or to adequately resolve the conflict or perceived conflict.



Non-compliance with APES 345.3.2, APES 345.3.4, APES 345.3.7and APES 110.220

4. Member has not complied with independence requirements for assurance

engagements.




5. Where the Member was not adequately qualified or experienced to undertake the engagement, the Member did not decline the engagement, or seek expert assistance and make the relevant disclosures.




6. Member has not assessed the professional competence and objectivity of a third party’s work, or the appropriateness and adequacy of that work.



7. Where permitted, Member has not notified the client or relevant third party as soon as practicable where the Member provided confidential information in accordance with a legal obligation of disclosure.

(2) Requirements

for Compliance


8. Member did not document and communicate the terms of engagement in accordance with APES 305.

(4) Evidence for Compliance

Non-compliance with APES 345.4.1 and APES 305

9. Member did not comply with professional appointment requirements when approached by a potential client.



10. Where the Member did not have a legal obligation of disclosure, Member disclosed the opinion or the name of a third party without the third party’s prior consent.

(3) Representation

of compliance


11. Member did not gather sufficient and appropriate evidence to ensure that the relevant conclusions were properly supported.



12. Member accepted an additional engagement with the client without considering and evaluating the significance of any threats, or considering and applying necessary safeguards to reduce such threats to an acceptable level.




13. Member has provided other professional services to a client, during the reporting service engagement period, where the objectives have been inconsistent with the reporting service engagement.



ASS Non-compliance with APES 345.6.3




15. Member has not taken all reasonable steps to ensure that the prospective

financial information does not contain false or misleading information, or omit material information.

(4) Evidence of Compliance, and where necessary



16. Member has not taken all reasonable steps to ensure that the disclosure document clearly states the basis(es) and key assumptions used in forecasting the prospective financial information.

(3) Representation

of compliance



EXAMPLE REVIEW FINDINGS (PROSPECTIVE FINANCIAL INFORMATION)

REPORT TYPE


17. Member did not take appropriate steps after finding out that, subsequent to the issue of a disclosure document, information on which the reporting service engagement was based contained false or misleading information or omitted material information.




18. Member has knowingly or recklessly been associated with a statement that,

by its content or by an omission, is false or misleading in a material manner.

(3) Representation for Compliance and

(5) Follow Up Received


19. Member did not communicate to relevant persons or entities, on a timely basis, all significant matters arising from the reporting service engagement.



20. Member’s professional fee has not been computed in accordance with the Code.



21. Member entered into a contingent fee arrangement or received a contingent fee where independence was required, or where the Member purported to be independent.

(5) Follow Up Received


22. Member did not consider the firm’s policies and procedures to determine whether to continue acting for the client where actual or probable litigation arose from a reporting service.

(2) Requirements

for Compliance



DUE DILIGENCE COMMITTEES Please note:



• Professional services provided in connection with a due diligence committee must be considered in light of the mandatory professional standards contained in APES 350.



• Special consideration has to be taken as to what the role of the Member is in the due diligence. The seriousness of the breach may depend as to what roil the Member is playing in the Committee. There will be differences depending on whether the Member is an Observer or a Member.


EXAMPLE REVIEW FINDINGS (DUE DILIGENCE)

REPORT TYPE



(4) Evidence of

Compliance




Non compliance with APES 350.3.1-7, APES 350.3.10- 13, APES 350.3.18, APES 10.100, APES 110.130, APES 110.140, APES 110.210, APES 110.220, APES 110.280, APES 110.290 and the Corporations Act 2001

3. Member has not sought expert assistance or advice from a suitably qualified third party or declined the engagement where matters are outside the professional expertise of the member.


(5) Follow up review


4. Member has not made appropriate disclosures or assessments in relation to third party advice received in connection with a due diligence sign-off or other reports.



Non compliance with APES 350.14 and APES 350.15

5. Member has not documented and communicated the terms of engagement in accordance with APES 305 Terms of Engagement and APES 350.


Non compliance with APES 350.4.1 and APES 305

6. Member did not take appropriate action where a due diligence planning memorandum assigned responsibilities to the member that extended beyond those agreed in the engagement document.




7. Member did not decline the engagement where the due diligence planning memorandum still included responsibilities that conflicted with, or are prohibited by APES 350.

(3) Representation

of Compliance


8. Member did not comply with applicable Auditing and Assurance Standards. (3) Representation

of Compliance or



9. Member did not issue a materiality letter to the client. (4) Evidence of

Compliance


10. Member did not specify the financial information and/or other specific information that the member had performed procedures on, and the nature of those procedures.



11. Member reported or advised on matters outside the member’s area of

expertise.

(3) Representation

of compliance or



12. Member signed a report to those charged with governance that included information outside that specified or where the member was in a position other than a Due Diligence Committee (DDC) Member.




EXAMPLE REVIEW FINDINGS (DUE DILIGENCE)

REPORT TYPE


13. Member did not bring to the attention of the client and/or its due diligence

committee any significant concerns relating to relevant matters.




14. Member prepared the financial information that was the subject of the due diligence sign-off or extracts, summaries or analysis thereof provided elsewhere in the public document.



15. Member did not agree the specific procedures to be undertaken with the client in providing a verification process in relation to relevant information in the public document.

(3) Representation

of compliance


16. Where the member accepted an engagement to verify or assist a Client or its DDC with verifying disclosures and information relating to the taxation law, the Member did not exercise professional judgement in determining the nature, timing and scope of the procedures and consider the Terms of Engagement



17. Member did not consider or assess the scope of any agreed procedures to perform a due diligence sign-off as a DDC Observer.



18. Member did not comply with the relevant professional standard when

providing an assurance engagement, a valuation service, a taxation service, or a professional service that included prospective financial information.




Non compliance with APES 350.5.17-20, APES 210, APES 225, APES 220 and APES 345

19. Member did not prepare working papers that appropriately documented the work performed and other relevant information.



20. Member did not make appropriate assessments and considerations before providing a due diligence sign-off to the client and its due diligence committee.



21. Member issued a due diligence sign-off containing conclusions in the form of negative statements relating to:

• misleading or deceptive information; or

• an unreasonable level of inquiries performed

• where the procedures undertaken comprised limited enquiry and/or were pursuant to a past engagement.



22. Member’s due diligence sign-off did not contain all relevant information. (4) Evidence of

Compliance


23. Member did not consider additional information when providing a due

diligence sign-off in respect of a public document which had not been finalised.





24. Member did not obtain the final draft of the public document prior to

providing consent to being named in, or having their report in, that public document.

(2) Requirements for Compliance or



25. Member did not bring to the attention of the client and/or its due diligence

committee any material new circumstances relevant to the public document after its issue.





26. Member has not computed a professional fee in accordance with Section 240 Fees and Other Types of Remuneration of the Code.


Non compliance with APES 350.8.1 and APES 110.240

27. Member entered into a contingent fee arrangement or received a contingent fee where the professional service required independence or where the professional service purported to be independent.



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