ASIC has clarified its auditor report requirements under its relief for investor directed portfolio services (IDPS), IDPS-like registered schemes (IDPS-like services) and managed discretionary accounts (MDAs).

The amendments to ASIC’s relief clarifies the nature of the auditor report required of electronic transaction facilities made accessible to clients of these services.

The amendments to ASIC’s policy announced today were foreshadowed in ASIC’s Information Release IR 07-27 ASIC consults on proposals to review its policy on investor directed portfolio services.

The amendments mean that where electronic access to account information is given to clients of IDPS, IDPS-like and MDA services, auditors will only need to review the information that is displayed at the end of each quarter. The auditor’s review is limited in this way provided that:

• the information at the end of each quarter remains accessible to clients through the same electronic facility until the end of the following financial year; and
• the electronic facility through which the information is accessible includes a statement to the effect that only information displayed at the end of the quarter will be audited.

This relief also applies a materiality test to the auditor’s opinion required about whether asset information in annual client statements reconciles with corresponding amounts in the service provider’s records.

The changes to ASIC’s relief responds to concerns raised by some auditors that the previous form of auditor’s report might involve more work than was intended by ASIC’s policy.

Background

As a condition of ASIC’s current relief for IDPS, IDPS-like and MDA services, clients of these services must be given quarterly reports containing information about transactions, assets and values, revenues and expenses.

Alternatively, if a client agrees, this information can be provided electronically on a substantially continuous basis.

Clients must also receive an annual report containing information about transactions, assets and values together with a report of the annual audit of this information. If detailed transactional information is provided via a continuous electronic access facility or in quarterly reports and is subject to an audit report, the information does not have to be repeated in the annual statement.

Where an IDPS or MDA operator or responsible entity of an IDPS-like scheme provides electronic access to information that would be contained in the quarterly report, the report by the auditor that accompanies the annual report must include a statement as to whether or not the auditor has any reason to believe the electronically accessible information was materially misstated.

Download a copy of Class Order [CO 07/480] Investor directed portfolio services, investor directed portfolio-like services and managed discretionary accounts - amendments.