A. Client acceptance and retentionA. Client acceptance and retention

A. Client acceptance and retention

Tasks

A.1 Planning

6. Identify the criteria for the client acceptance/retention decision on a potential/existing SMSF audit and assurance engagement (the engagement).

A.2 Evidence gathering

7. Gather evidence related to the client acceptance/retention decision.

8. Gather information about the fund to ensure that the approved SMSF auditor is able to make an objective assessment regarding auditor independence, and also assess whether the approved SMSF auditor has the knowledge and skill required to undertake the engagement adequately.

9. This information will include both of the following:

(a) details of fund trustees – used to assess auditor independence matters;

(b) details of fund investments – used to determine whether there are complex issues related to the types of investments and compliance (SIS Act compliance) with the SIS Act (including compliance with the Regulations as required by that Act) in relation to which the approved SMSF auditor may not have the skills and experience required for the engagement.

A.3 Evidence evaluation

10. Evaluate the evidence related to the client acceptance and, or, retention decision.

11. Evaluate the information and document any difficulties which may be encountered in the engagement and their potential resolution.

12. This information will include both of the following:

(a) any identified independence issues and how they may be mitigated;

(b) the steps the approved SMSF auditor has taken to ensure they have the skills required to address complex issues which may exist.

A.4 Decision making

13. Decide whether to accept or reject a particular engagement.

14. Make an objective decision regarding the appropriateness of accepting an appointment giving appropriate regard to any independence matters, potential risks, and the approved SMSF auditor’s skills and knowledge.

15. Implement appropriate safeguards that will mitigate identified independence threats to an acceptable level.

16. Decline the engagement where the approved SMSF auditor is unable to satisfy the independence requirements, including where appropriate safeguards are not able to be implemented.

Note: Approved SMSF auditors are required to be independent of their clients both in appearance and in fact. The concept of professional independence is fundamental to compliance with the principles of integrity and objectivity, which are consistent with objective and impartial judgement. Approved SMSF auditors need also to be mindful of independence issues arising during the conduct of the engagement. If the latter arises care needs to be taken to either implement appropriate safeguards, or ultimately resign from the engagement if no safeguards are appropriate. Approved SMSF auditors need to be particularly aware of the advocacy threat created where he or she has provided advice in connection with a transaction, and decline the engagement where independence is impaired, or perceived to be impaired.