It is important that the auditor of an ADI recognises and understands their additional responsibilities under sections 16B, 16BA and 16C of the Banking Act, imposed on any auditor^[115] of an ADI, an authorised NOHC, or their subsidiaries, to provide information to APRA upon request, or where the auditor possesses reportable information specified in that Act, or where the auditor considers that the provision of information would assist APRA in performing its functions under the Banking Act or the FSCODA. Failure to notify APRA as required represent criminal offences, which attracts criminal penalties.^[116]

Under the Banking Act, these matters are to be reported to APRA in writing and within specified time periods.

Sections 16B, 16BA and 16C of the Banking Act is applicable to all and any auditor of an ADI, authorised NOHCs, or their subsidiaries, not only to auditors appointed by an ADI to meet the prudential requirements under APS 310.

In relation to reporting under sections 16B and 16BA of the Banking Act, there is no requirement for the appointed auditor of an ADI to carry out additional work to satisfy the auditor with respect to the above matters. The appointed auditor reports to APRA on the basis of, for example:

1. information obtained during the course of the auditor’s financial report audit [and review] under the Corporations Act;
2. additional reasonable and limited assurance procedures undertaken for APRA prudential reporting purposes (pursuant to APS 310 and 3PS 310, or in accordance with the requirements of another specific APRA Prudential Standard);
3. other audit work undertaken at the ADI (for example, Australian Financial Services Licence audits); and
4. the appointed auditor’s current knowledge of the ADI’s affairs at the time of issuing the auditor’s assurance report.

In circumstances where the appointed auditor identifies that a reportable matter may exist, the auditor carries out such additional work as considered appropriate, to determine whether the facts and circumstances provide reasonable grounds for believing that the matter does in fact exist. In reaching this conclusion, the auditor exercises professional judgement and seeks appropriate legal advice if necessary.

The ADI may also notify APRA of the matter(s) identified by the appointed auditor, and provide details of any action(s) taken, or to be taken, in response. However, such notification by the ADI does not relieve the appointed auditor of the statutory obligation to report directly to APRA.