APRA has written to ADI auditors setting out its expectations in relation to APS 310 reports for assurance engagements undertaken in relation to reporting periods commencing on or after 1 July 2011.

The letter follows APRA’s review of the first year of reporting by external auditors under the revised standard APS 310.

This letter seeks to clarify for auditors APRA’s expectations on the following matters:
• a General and Specific Observations appendix to the auditor’s report should be used to highlight any material internal control weaknesses or other reporting issues that are not qualifications;
• auditors should start from the premise that all data reported to APRA are sourced from accounting records and so require a reasonable assurance opinion;
• the ADI reporting form ARF 230.0 Commercial Property should be subject to a reasonable assurance sign-off by auditors;
• a qualified ‘except for’ opinion or a disclaimer of opinion should be issued in certain circumstances; and
• detail should be provided on the level of reliance by the external auditor on the work of internal audit in APS 310 reporting.