It is important that the Appointed or Group Auditor of an insurer, an authorised nonoperating holding company (NOHC), or a subsidiary of an insurer or authorised NOHC, understands the additional responsibilities in relation to nonroutine reporting to APRA, imposed under sections 49, 49A and 49B of the Act.

Under section 49 of the Act, APRA may give written notice to a person who is, or who has been, the Appointed or Group Auditor of either an insurer, an authorised NOHC, or a subsidiary of an insurer or authorised NOHC, to provide information about such entities to APRA if APRA considers that the provision of such information will assist APRA in performing its functions under the Act.^[33]

Section 49A of the Act identifies matters of which APRA needs to be notified

1. immediately (for example, where an existing or proposed state of affairs may prejudice materially the interests of policyholders); and
2. as soon as is practicable^[34] (for example, where an insurer’s or insurance group’s failure to comply with the Prudential Standards or a condition of its authorisation is or will be significant).^[35]

These matters are to be reported to APRA in writing. When an Appointed or Group Auditor contravenes this section of the Act, the Appointed or Group Auditor will be guilty of an offence under the Act.

Section 49B of the Act provides that a person who is, or who has been, the Appointed or Group Auditor of either an insurer, an authorised NOHC or a subsidiary of an insurer or authorised NOHC, may provide information about such entities to APRA if the person considers that the provision of that information to APRA will assist APRA in performing its functions under the Act or the Collection of Data Act.

GPS 310 requires the Appointed or Group Auditor, in assessing whether the interests of policyholders may be prejudiced materially^[36], to consider not only a single activity or a single deficiency in isolation, as policyholders’ interests may be prejudiced materially by a number of activities or deficiencies which, although not individually material, do amount to a material threat when considered in totality.

In circumstances where the Appointed or Group Auditor has reasonable grounds to believe that the interests of policyholders are, or are likely to be compromised, the Appointed or Group Auditor may need to consider the whistle blowing provisions in both the Act and CPS 520.

GPS 310 requires matters reported to APRA by an Appointed or Group Auditor also to be reported to the insurer or insurance group to which the matter relates, unless the Appointed or Group Auditor considers that by doing so the interests of policyholders would be jeopardised, or where a situation of mistrust between an Appointed or Group Auditor and those charged with governance or senior management of the insurer or insurance group exists.

In relation to reporting under sections 49A and 49B of the Act, there is no requirement for the Appointed or Group Auditor of an insurer or insurance group to carry out additional work to satisfy themselves with respect to the above matters. Thus, subject to the reporting requirements as per GPS 310, the Appointed or Group Auditor is not required to extend the scope of the work to ascertain that the insurer or insurance group is complying with all aspects of all applicable Prudential Requirements. If the Appointed or Group Auditor becomes aware of any of the matters identified under sections 49A and 49B of the Act, the Appointed or Group Auditor brings the matter(s) to the attention of an appropriate level of management and those charged with governance of the insurer or insurance group. If the response provided by the insurer or insurance group is unsatisfactory, the Appointed or Group Auditor is obliged to report the matter(s) to APRA in a timely manner, having regard to materiality as described in paragraphs 73-78.

Section 49C of the Act and GPS 310 include provisions to protect an Appointed or Group Auditor providing information to APRA, in good faith and without negligence, from any action, claim or demand by, or any liability to, any other person in respect of the information.