FS70/71 audits and the extent to which auditors are obliged to investigate compliance matters in addition to the financials

Tuesday, 5 June 2012 | By Tim Nethercote
In regard to auditors reporting matters to ASIC Regulatory Guide 34 – Auditor’s obligations: reporting to ASIC provides helpful discussion around the obligations arising from ss311, 601HG and 990K.  This is the link.

At a recent seminar ASIC speakers made some interesting observations:
  • An auditor of an AFSL does have an obligation to look at s912A and other compliance obligations;
  • A compliance manual is not enough.  The auditor needs to look beyond that but still at a reasonably high level. i.e. is it being used?  (One surveillance ASIC did found the compliance manual being used to raise the computer monitor of one of the employees!);
  • Don’t have to check SoAs but an auditor should check that there is a monitoring program in place;
  • Recruitment is important and a check for any banned people “must be done”;
  • The audit papers should evidence that the auditor is aware of the company’s operations and understands them;
  • If basic notifications to ASIC are not done correctly (eg notification of changes of Responsible Managers), then this can be a flag to ASIC for further enquiries.
Tip: All auditors of AFSL holders should read RG 34

Author: Mark Harbert 
Lawyer: Tim Nethercote 

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