Clarifying the Compliance Plan Auditors Role

Includes: Role of the Responsible Entity, Role of the Compliance Plan Auditor, Inherent Limitations of Auditing Compliance with the Compliance Plan, Reporting on Whether the Compliance Plan “Continues to Meet” the Requirements of Part 5C.4 of the Corporations Act

Role of the Responsible Entity


Under the Act, the responsible entity is required to ensure that the scheme has a compliance plan which meets the requirements of section 601HA. This includes that the compliance plan must set out adequate measures that the responsible entity is to apply in operating the scheme to ensure compliance with the Act and the scheme’s constitution. The compliance plan, which is lodged with ASIC with the application to register as a managed investment scheme under section 601EA, must be signed by all the directors of the responsible entity under section 601HC and arrangements must be in place for the audit of the compliance plan under section 601HG. Section 601FD(1)(f) requires the directors of the responsible entity to take all steps that a reasonable person would take to ensure that the responsible entity complies with the Act, the scheme’s constitution and the scheme’s compliance plan.

Role of the Compliance Plan Auditor


The role of the compliance plan auditor under section 601HG(3) of the Act is to examine the scheme’s compliance plan and carry out an audit of the responsible entity’s compliance with the compliance plan for the financial year. Furthermore, the auditor of the compliance plan must give the responsible entity an audit report which states whether in the auditor’s opinion:

  1. the responsible entity has complied with the scheme’s compliance plan during the financial year; and
  2. the compliance plan continues to meet the requirements of Part 5C.4 of the Act.


The second part of the auditor’s opinion as stated in (b) above, is to be expressed “as at” the date of the end of the financial year.[4]


As the wording in section 601HG(3)(c)(ii) is ambiguous, the AUASB believes that the expression “continues to meet” may be interpreted to mean “as at” the end of the scheme’s financial year.

Inherent Limitations of Auditing Compliance with the Compliance Plan


Due to the nature of audit testing and other inherent limitations of an audit, together with the inherent limitations of a compliance plan and its related compliance measures, there is a possibility that a properly planned and executed audit will not detect all deficiencies in a scheme’s compliance plan. Accordingly, the audit opinion under section 601HG(3) is expressed in terms of reasonable assurance and cannot constitute a guarantee that the compliance plan is completely free from any deficiency, or that all compliance breaches have been detected.


There are also practical limitations in requiring an auditor to perform a continuous examination of the compliance plan, and form an opinion that the entity has complied at all times with the Act during the period covered by the compliance plan audit report. However, the auditor performs tests periodically throughout the financial year to obtain evidence and have reasonable assurance that the measures complied with the written descriptions and were adequate throughout the period under examination.

Reporting on Whether the Compliance Plan “Continues to Meet” the Requirements of Part 5C.4 of the Corporations Act


The requirements of the Act relating to reporting on whether the compliance plan “continues to meet” the requirements of Part 5C.4, including matters under section 601HA(1), are stated in broad terms. Such requirements are augmented by the examples and guidance in the Annexure to RG 132 and the additional expectation that compliance plan auditors consider whether the compliance plan is adequate to ensure compliance with the disclosure and advertising obligations of RG 45 for mortgage schemes and RG 46 for unlisted property schemes. The auditor uses such criteria to assess the appropriateness of the design of the compliance measures contained in a scheme’s compliance plan.


The compliance plan auditor considers how the responsible entity has satisfied itself that the scheme's compliance plan and the measures within it continue to be appropriate throughout the financial year. The Annexure to RG 132 provides general guidance about various matters which may be considered by responsible entities when developing the scheme's compliance plan. In addition, ASIC has benchmarked compliance plans for various industry schemes and provided examples of better compliance plans for those types of schemes in RG 116, RG 117, RG 118, RG 119 and RG 120. The compliance plan auditor may also consider these matters when planning and undertaking a compliance plan audit. However, as compliance plans will vary between different responsible entities and their respective managed investment schemes, it will be necessary for the auditor to apply professional judgement when applying audit procedures and evaluating compliance plans and the design of compliance measures, having regard to the size and complexity of the particular managed investment scheme under examination.