Auditors will significantly improve the documented proof they are complying with the auditor independence standards outlined in APES 110 with an up-to-date ASQC 1 manual, a specialist practitioner has said.
The ASQC 1 manual requires the auditor to establish policies and procedures, with regard to independence, designed to provide the firm with reasonable assurance that it and its staff members are maintaining the level of independence required by the governing standard.
According to Super Sphere director Belinda Aisbett, it is more important than ever not only to have an ASQC 1 manual in place, but also to carry out the procedures stipulated in the guideline.
“Get it done because if the ATO is going to be reviewing all of the audit practices over the next couple of years in light of this independence focus, having your ASQC 1 manual there [and] treating it seriously … is going to go a long way to the ATO saying this auditor takes independence seriously, everything is documented beautifully, they’ve got it covered,” Aisbett told attendees at the recent SMSF Association Virtual Technical Summit 2021.
“You’re going to slide right down the ATO risk assessment ladder and land at the bottom [if you do not do this].
“You might think it’s just more paperwork, but I think it’s going to be the one [piece] of paper that you really want to have if the ATO comes in and has a look at your firm or you as the auditor.”
She pointed out practitioners need to make sure they are following the latest ASQC 1 rules when they undertake this exercise.
“The ASQC 1 requirements were updated recently and there is a new compilation [that has been] operating from 15 July 2020 … so just make sure you’re looking at the latest compilation of that publication,” she said.