The latest version of the Independence guide (Fourth edition, February 2013) for accountants and auditors has been released by the Joint Accounting Bodies. It is available via the websites of CPA Australia, The Institute of Chartered Accountants Australia and The Institute of Public Accountants. The Guide seeks to assist professional accountants in complying with the auditor independence requirements set out in APES 110 (Code of Ethics for Professional Accountants). The Guide sets out numerous examples and scenarios of independence issues involving accounting advice; tax services; corporate finance services; valuation services; accounts with financial institutions; loyalty schemes; insurance claims; 10 hour “maximum hours test”; former partner joins audit client; and other assurance engagements.
Major changes to the 2013 version of the Guide include the amended definition of “public interest entity” in APES 110 (operative from 1 January 2013); the concept of a “key audit partner” and extending the independence requirements for audits of listed entities to all public interest entities.
The Guide notes that APES 110 has established a 7-year rotation rule that applies to all key audit partners of audits and reviews of public interest entities from 1 January 2013. For listed entities, s 324DA of the Corporations Act 2001 continues to apply the more restrictive 5-year rotation rules to individuals who “play a significant role” in the audit.
The 2013 Guide also includes expanded coverage of the independence obligations for auditors of self-managed super funds (SMSFs). It is the view of the professional accounting bodies that an approved SMSF auditor should decline an audit engagement where:
- the individual auditor (or staff reporting directly to them) has significantly prepared the accounts for the SMSF;
- it is the auditors own SMSF;
- a partner within their own firm is a member/trustee of that SMSF; or
- a relative or a related party of the auditor is a member/trustee of that SMSF or
- where the auditor has a “close personal relationship” or business relationship with a member/trustee of the SMSF.
Note that approved SMSF auditors are specifically required by SIS Reg 9A.06 to comply with APES 110 from 31 January 2013.
[LTN 49, 13/3/13]
Code of ethics for accountants: revisions proposed
The Accounting Professional & Ethical Standards Board (APESB) has released exposure draft (01/13) which proposes amendments to the definitions and auditor independence requirements in APES 110 Code of Ethics for Professional Accountants. Once finalised, the proposed revisions to the Code will be operative from 1 July 2013. The proposed revisions are:
- a new AUST paragraph to address circumstances where auditors may be receiving multiple referrals from a single source. The Board said the revision addresses risks identified in the self-managed super fund (SMSF) context;
- a minor editorial amendment to the definition of Immediate Family; and
- minor editorial amendments to the preface of ss 290 and 291.
COMMENTS are due by 19 April 2013.
[LTN 53, 19/3/13]