This Guidance Statement has been developed specifically for circumstances where service organisations provide investment management services to user entities, where those services and the controls over them, are part of the user entity’s information system, including business processes, relevant to financial reporting,^[13] and as a result are relevant to the audit of a user entity’s financial report. The Investment Management Services addressed in this Guidance Statement are:

• Custody.
• Asset Management.
• Property Management.
• Superannuation Member Administration.
• Investment Administration.
• Registry.

Each of these services is defined in Appendix 3.

Controls over the calculation of unit pricing are not included as part of the services addressed in this Guidance Statement as reliance can generally be placed on the publicly available unit price, where appropriate, with additional procedures to assess the bona fides of the fund such as sighting audited financial statements of the fund, for the assertion of valuation for investments in unitised funds. If user auditors require assurance over unit pricing, for governance or compliance purposes, they may request that control objectives and controls for unit pricing are included in the service organisation’s description of the system and audited by the service auditor.

Operators of investor directed portfolio services (IDPS)^[14] and investor directed portfolio-like services are required by ASIC Class Order 02/294^[15] and Class Order 02/296^[16] to obtain an auditor’s report providing:

1. an opinion on the internal controls and other relevant accounting procedures as they relate to the specific annual investor statements; and
2. a review conclusion on the annual investor statements, quarterly reports in certain circumstances and information accessible to clients electronically.

These class orders provide requirements for the form and content of the report in these circumstances. Reports provided under these class orders may provide sufficient appropriate audit evidence for a user auditor. If additional evidence is required by the user auditor, a service auditor’s report on controls or on financial information may be requested. IDPS or IDPS-like services generally include custody and investment administration, consequently, if a type 1 or 2 report is provided, the user auditor can reasonably expect the operator (service organisation) and service auditor to report on the control objectives for the relevant services provided in this Guidance Statement.

Types of service organisations which provide some or all of the investment management services addressed in this Guidance Statement include:

• Custodians.
• Third Party Administrators.
• Investment Managers.
• Registrars.
• Trust Departments of Financial Institutions.
• Prime Brokers.

The responsible parties which typically engage the services of these service organisations on behalf of user entities, include but are not limited to:

• Trustees of Superannuation Funds.
• Responsible Entities for Registered Managed Investment Schemes.
• Trustees of Unregistered Unit Trusts.
• Boards of Insurance Companies.

The responsibilities of the responsible party of a user entity are set out in the relevant laws and regulations governing their role and the particular services they oversee.