In addition to the issues normally considered when undertaking financial report audits and compliance plan audits, auditors of mortgage schemes will need to consider several matters that are particularly important to the operation of such schemes. These matters include whether:

1. appropriate documentation is available in respect of all deposits or receipts to the scheme and its bank accounts, and in relation to payments and withdrawals from the scheme and its bank accounts;
2. appropriate documentation is available in respect of all loans made by the scheme, including detailed loan agreements, securities held, guarantees, terms of repayments and external independent valuations;
3. the mortgage scheme's circumstances are consistent with the basis of reporting, that is whether it is a going concern for the relevant period; and
4. the compliance plan adequately addresses the expectations about disclosure and advertising specified by ASIC in RG 45 and the relevant measures are complied with to ensure disclosure against the benchmarks provided in RG 45.

The auditors of mortgage schemes may also take into account other specific compliance related considerations relevant to such schemes. These considerations include whether:

1. investor funds have been placed in the mortgage scheme on the basis of the written approval of the investor;
2. specific disbursements of investor funds are supported by written authorities from investors;
3. investor funds are capable of being remitted back to the investor within the time period agreed by the investor and that the net monies loaned (after agent's commission or loan establishment fees) are sufficient to enable payment of the amount that has been agreed to be paid to the investor;
4. investor funds have been appropriately secured e.g. first mortgage or other charges or liens are taken out over the assets and undertakings of the investee or borrower;
5. commissions or loan establishment fees paid to agents are in accordance with legally binding agreements between the parties;
6. interest and principal payments from the investee or borrower are being received in accordance with loan agreements;
7. interest paid to the investors is financed from receipt of investee or borrowers funds and not from the commissions or other monies due to solicitors or agents;
8. periodic statements are provided to investors in respect of the disbursement of their funds until the funds are fully utilised in the mortgage scheme; and
9. that monthly bank reconciliations have been prepared in respect of each “trust” account.

It is important that auditors take the above considerations into account when planning and undertaking both financial report audits and compliance plan audits of mortgage schemes. While not purporting to be an exhaustive list of compliance matters to be considered by auditors, they represent areas in which there should be appropriate controls in place, so as to adequately mitigate the risk of a material misstatement in a scheme’s financial report and/or material non-compliance with a scheme’s compliance plan.