In order to provide financial services in Australia, a person or entity is required by the Act to either hold an Australian Financial Services Licence (AFSL) (a Licensee) or be an authorised representative of the AFSL holder. The Australian Securities and Investments Commission (ASIC) has responsibility for assessing and granting AFSLs on the basis of criteria set out in the Act^[1]. In addition, ASIC enforces financial and assurance requirements for Licensees to meet their obligations under the Act.

The assurance requirements relating to Licensees may give rise to a number of special assurance considerations. Accordingly, this Guidance Statement has been developed to identify, clarify and summarise the responsibilities which the auditor has with respect to conducting such assurance engagements, and to provide guidance to the auditor on additional factors which the auditor may consider when planning, conducting and reporting in relation to the assurance engagements of Licensees.

This Guidance Statement does not extend the responsibilities of the auditor beyond those which are imposed by Auditing Standards, Standards on Assurance Engagements (ASAEs), the requirements of the Act and the Regulations, applicable ASIC regulatory documents, class orders and legislative instruments.

This Guidance Statement is to be read in conjunction with, and is not a substitute for referring to the requirements and application and other explanatory material contained in:

1. The Auditing Standards;
2. Applicable Standards on Assurance Engagements, including ASAE 3000,^[2] ASAE 3100,^[3] ASAE 3150^[4] and ASAE 3450.^[5]
3. Applicable ASIC regulatory documents including Regulatory Guide 166 Licensing: Financial requirements (RG 166) reissued in July 2022 and Pro Forma 209 Australian financial services licence conditions (PF 209) reissued in July 2022; and
4. Applicable ASIC Class orders including ASIC Class Order CO 13/760 Financial Requirements for responsible entities and operators of investor directed portfolio services; CO 13/761 Financial requirements for custodial or depository service providers; and CO 12/752 Financial requirements for retail OTC derivative issuers.

This Guidance Statement should not be used as a checklist of issues to be considered by the auditor. Furthermore, it is not intended that this Guidance Statement limits or replaces the auditor’s professional judgement or limits the application of AUASB Standards on such engagements. AUASB Standards contain the basic principles and essential procedures to be applied to assurance engagements. Assurance engagement programs are to be designed by the auditor to meet the requirements of a Licensee's particular circumstances, giving careful consideration to the size and type of the Licensee and the adequacy of its internal control structure.

Legislative Background

The Financial Services Reform Act 2001 (FSR Act) and the overall AFS licensing regulatory regime, which is administered by ASIC, are operative for all Licensees under Chapter 7 of the Act.

The FSR Act provides a single licensing regime for financial advice and dealings in relation to financial products. The Act requires a person or an entity that operates a financial services business to hold an AFSL or be authorised by the Licensee.