Compliance, Superannuation

Terms of engagement need review

SMSF terms of engagement

An amendment made last year to APES 305 will require accountants servicing SMSF clients to review their terms-of-engagement documents before the end of the 2021 financial year.

A technical specialist has reminded accountants in public practice servicing SMSF trustees of the need to review the terms of engagement they provide to their clients before 1 July 2021 to conform with amendments made to APES 305.

“APES 305 governs the documentation and how you communicate your terms of engagement to your client, and the revision will change how you engage with your clients to provide those professional services to ensure transparency and honesty with what you’re doing with clients’ confidential information and [with] whom and where that information resides,” Accurium head of education Mark Ellem told delegates at the recent SMSFPD Digital 2021 event hosted by selfmanagedsuper.

Specifically, the amendment has been made to provide clients with better disclosure when accountants are using services provided via the internet, Ellem noted.

“There is a revised list of matters to be considered for inclusion is an engagement document when the firm, your firm, is using outsourced services or cloud computing when delivering your professional services to your clients,” he said.

According to Ellem, information that will now need to be disclosed in the SMSF terms of engagement document include the name of the service provider, its geographic location and the nature and extent of the services in question.

Further, he confirmed the amended standard will apply to any accounting firm currently using the main SMSF administration software applications accessed in the cloud.

“Cloud computing means any computer resources usually provided by a third party over the internet. So [this involves situations] where the cloud computing entrusts the remote third party with data [or] information of the [accountant’s] clients,” he noted.

“So if you’re not using your internal server, that’s located on your premises, or if you client’s data is going to be stored on a third party’s [facility], and that would cover off all of the major administration platforms, then that is information that needs to be passed through to the client as to where their personal data is being stored under the terms of engagement.”

Guidance will be made available to assist accountants with this matter, but this is yet to be finalised, he revealed.

Practitioners who are members of a major accounting body, such as CPA Australia, Chartered Accountants Australia and New Zealand and the Institute of Public Accountants, will need to conduct this review.

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