Superannuation prudential framework – minor and consequential audit updates

To: All RSE licensees and RSE auditors
 

The Australian Prudential Regulation Authority (APRA) has today released updates to the prudential framework for superannuation in relation to financial reporting and audit requirements. The updates relate to the following standards and guidance and apply from 30 June 2024.

Consultation overview

On 17 January 2024, APRA released proposed minor and consequential updates to the above standards and guidance: Audit consequential amendments – superannuation.

The proposed changes amend the prudential framework for superannuation to reflect legislative reforms in relation to the financial reporting and audit requirements for superannuation and minor simplification amendments.¹  These include removing the requirement for an RSE auditor to use an APRA approved form and retiring SPG 310.²

APRA received four submissions, all from the audit profession. The submissions raised two key areas of feedback, which APRA has taken into account as set out below.

Response to submissions

Scope of reasonable assurance audit

APRA previously proposed to broaden the scope of reasonable assurance audit requirements. Feedback from submissions raised concerns that the expanded scope would be too broad, could be implemented inconsistently and may expose members to additional cost for limited benefit.

In light of this feedback, APRA has, at this time, determined to not expand the scope of reasonable assurance audit requirements as part of this minor and consequential amendments package. APRA has introduced Attachment B within SPS 310, which specifies the scope of reasonable assurance audit requirements, in line with Part 2(B) of the discontinued approved form.

Retirement of SPG 310 guidance

APRA proposed to retire SPG 310 on the basis it was no longer required given discontinuance of the approved form and the legislative changes.

Submissions highlighted that the guidance in SPG 310 relating to entities winding up was still relied upon. In response, APRA has made a minor amendment to Attachment A of SPS 310 in line with the existing guidance to clarify the requirements that apply to entities winding up.

Further, during consultation, APRA noted some divergence in approach in the specific context of audits for a small number of RSE licensees with multiple RSEs. APRA confirms its expectation that the RSE auditor should conduct the full scope of the audit requirements required under SPS 310, which may include indicating how they have considered and placed reliance on other audit reports such as the audit report for the RSE licensee.  APRA will engage bilaterally with the small number of relevant RSE licensees and their auditors on this issue, focusing on future audits not yet in-train.

As a result of the above, APRA will proceed with its proposal to retire SPG 310.

Related consequential amendments

A number of other minor and consequential amendments to APRA’s prudential framework are also being finalised as part of this release which are contained in SPS 310, SPS 510, SPS 520 and SPG 520. Final versions of SPS 310, SPS 510, SPS 520 and SPG 520 are available with the release of this letter, as well as versions showing tracked changes. A summary of these changes is set out in Attachment A of this letter.

Yours sincerely

Margaret Cole
Deputy Chair
APRA

Attachment A – Summary of additional minor and consequential amendments

Prudential Standard SPS 310 Audit and Related Matters

• Financial reporting removed from the SPS 310 audit scope (other than for RSE licensees of small APRA funds); 
• Audit reports required by SPS 310 may be lodged either with ASIC or APRA. Where lodged with ASIC, audit reports may be set out in one document; 
• RSE auditor to be appointed at all times, rather than appointed annually;
• Adjusted for legislative change that an RSE auditor can be an individual RSE auditor, an RSE audit firm or an RSE audit company;
• Extended time period for retention of working papers to 7 years to align with the Corporations Act 2001 (Corporations Act); 
• Other minor amendments to align with changes under the Corporations Act and the Superannuation Industry (Supervision) Act 1993 (SIS Act);
• Attachment A: minor amendments to update the reporting standards for audit, including updating SRS 533.0 so it applies to lifecycle investment options only and removal of SRS 702.0; and
• Attachment B: added a new Attachment B to identify the legislative provisions for a reasonable assurance compliance review.

Prudential Standard SPS 510 Governance

• New references to the Corporations Act are included, notably the terms ‘auditor’ and ‘actuary’ are replaced with ‘RSE auditor’ and ‘RSE actuary’ as defined in the SIS Act;
• Requirement to invite the RSE auditor to the meetings of the Board Audit Committee updated to refer to the individual RSE auditor or lead auditor; 
• Independence and conflicts of interest matters updated in relation to the individual RSE auditor or the lead auditor, where an RSE audit firm or company is appointed; and
• Approvals concerning the limited time for eligibility for an individual to play a significant role in the audit of an RSE will no longer be a matter for APRA from 1 July 2028 (with such approvals to instead be subject to the provisions of the Corporations Act).

Prudential Standard SPS 520 Fit and Proper

• Responsible persons amended to include an individual RSE auditor, or a lead auditor of an RSE audit firm or an RSE audit company (rather than an ‘RSE auditor’);
• Fit and proper requirements updated to apply to individual RSE auditors and lead auditors; and 
• Other minor amendments to align with legislative change under the Corporations Act and the SIS Act.

Prudential Practice Guide SPG 520 Fit and Proper

• Minor additions to clarify who a responsible person is in relation to an RSE auditor and to ensure that an RSE auditor’s responsible persons obligations under the Corporations Act are identified;
• Amended to clarify that an individual RSE auditor, or a lead auditor of an RSE audit firm or an RSE audit company is a responsible person (new paragraph in ‘Responsible persons’ section); and
• Amended to clarify that the additional criteria applying to RSE auditors and RSE actuaries do not apply to auditors or actuaries more generally or to those auditors or actuaries who are responsible persons for other reasons.

Footnotes

¹Treasury Laws Amendment (2022 Measures No. 4) Act 2023

²The approved form is here: Super - Approved Audit Form - 2022-2023 (apra.gov.au)