It is the responsibility of the RSE auditor to make the RSE licensee aware, as soon as practicable, of any identified material misstatements in RSE licensee APRA annual returns, material deficiencies in internal controls and instances of material noncompliance arising from the prudential reporting engagement.

Such communications are made as soon as practicable, either orally or in writing. The RSE auditor’s decision whether to communicate orally or in writing ordinarily is affected by factors such as the nature, sensitivity and significance of the matter to be communicated and the timing of the communications. If the information is communicated orally, the RSE auditor needs to document the communication.

When, in the RSE auditor’s judgement, TCWG do not respond appropriately within a reasonable period of time, the RSE auditor considers whether to modify the RSE auditor’s approved form report.

It is important that the RSE auditor understands the additional statutory responsibilities to report certain matters to APRA under the SIS Act. Failure to notify APRA as required represents a criminal offence, which attracts criminal penalties.

Material findings (misstatements, control deficiencies and noncompliance) are reported to APRA and the RSE licensee’s Board (or Board Audit Committee) as modifications to the RSE auditor’s approved form report.

Under Auditing Standard ASA 260 Communication with Those Charged With Governance (ASA 260), ASA 265 Communicating Deficiencies in Internal Control to Those Charged with Governance and Management (ASA 265) and ASAE 3000, the RSE auditor communicates relevant matters of governance interest arising from the engagement to TCWG on a timely basis. Examples of such matters may include:

• The general approach and overall scope of the engagement, or any additional requirements.
• Fraud or information that indicates that fraud may exist.
• Significant deficiencies in internal controls identified during the engagement. A significant deficiency in internal control means a deficiency or combination of deficiencies in internal control that, in the RSE auditor’s professional judgement is of sufficient importance to merit the attention of TCWG.
• Disagreements with management about matters that, individually or in aggregate, could be significant to the engagement.
• Expected modifications to the RSE auditor’s approved form report.

The RSE auditor informs TCWG of the RSE licensee of those uncorrected misstatements, other than clearly trivial amounts, aggregated by the RSE auditor during and pertaining to the engagement that were considered to be immaterial, both individually and in the aggregate, to the assurance engagement.