Tips for ensuring your audit documents are prepared and submitted on time

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With the end of financial year fast approaching, so is audit time.  To assist Australian Financial Services (“AFS”) Licensees and Limited AFS Licence Holders in their audit preparation, Sophie Grace has prepared the following checklist of important items to keep in mind as you prepare for your audit.

1. Know the lodgement date

Lodgement dates for AFS Licensees differs according to the entity which holds it.  Therefore it is important that you know when your audit is required to be submitted to avoid potential breaches (which are reportable to ASIC) and late fees.

Due to coronavirus, there has been an extension provided for lodgement for some firms so please check if this applies to you.

As a reference point, the usual lodgement dates are as follows in respect of the entity that holds the AFS Licence:

  • If it is a body corporate that is not a disclosing entity then your financial accounts are due within four months of 30 June (i.e. 31 October).
  • If it is a body corporate that is a disclosing entity then your financial accounts are due within three months of 30 June (i.e. 30 September).
  • If it is a non-body corporate (e.g. sole trader) then your financial accounts are due within two months of 30 June (i.e. 31 August).
  • If it is a Registered Scheme then your financial accounts are due within three months of 30 June (i.e. 30 September).

2. Contact your auditor

We suggest contacting your auditor now. This will allow you adequate time to prepare all the documents required for the audit process and eventual lodgement of your financial statements with ASIC.

Auditors require documentation that clearly demonstrates compliance procedures have been implemented properly and carried out throughout the entire audit period. Collating the documentation can be time consuming, particularly in smaller businesses when there are not a lot of resources to dedicate to the AFS Licence audit or Limited AFSL compliance review.

Recently, we have seen auditors increase their scrutiny on AFS Licensees and Limited AFSL Holders for a number of reasons, including increased scrutiny of their work by ASIC and even litigation against them for alleged poor audit standards.

3. Know what needs to be submitted

It is important that you know and understand the documentation that needs to be submitted for your audit. AFSL holders are required to submit the forms FS70 and FS71. Limited AFSL holders are required to submit a form FS76.

  • Form FS70 is a profit and loss balance sheet that provides ASIC with an outline of the current financial situation of the AFS Licensee. This form also covers the specific requirements for Responsible Entities, Custodial and Depository Service Providers as well as OTC Derivative Issuers. An AFS Licensee’s financial statements must be attached to the FS70.
  • Form FS71 is the audit report which is prepared and signed off by the auditor.
  • Form FS76 is an annual compliance certificate and requires Limited AFS Licence Holders to provide a range of certifications i.e. on client money, conflicts of interest, training, dispute resolution and risk management.

4. Review documents prior to submission

Ensuring that you review all forms prior to submission is a necessity. All information that you submit to ASIC should be correct, including the information that has been prepared by your auditor.  Double check your forms to ensure they make sense and also align with your AFSL conditions and your financial statements

If you require assistance in reviewing the forms prior to submission, contact Sophie Grace for assistance.

5. Make sure your records are easily accessible

Making sure your records are easily accessible will make the preparation for your audit quicker and simpler. Keep in mind that record keeping is also a legal requirement.

6. Lodge your accounts online

You must lodge your annual accounts report online via the ASIC Licensees portal. To register for online access visit the ASIC’s website.

Further Reading

If you would like to discuss further how we can assist you, please contact us.

About The Author

Alicia Pevely

Alicia Pevely

An integral member of the Sophie Grace team since 2012, Alicia has extensive experience in relation to financial services law, consumer credit law, regulatory matters and ASIC investigations. Working closely with her clients, Alicia has maintained a significant emphasis on AFS and credit licensing and liaising with ASIC. As General Manager, Alicia has oversight of all licence applications and provides advice and support in relation to more complex applications.  

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