Auditing Standard ASA 2025-1 Amendments to Australian Auditing Standards
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Commonwealth
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legislative instrument
Plain English Summary
4/10 complexity
This amending Auditing Standard requires auditors to state in their audit report when they applied independence requirements specific to certain entities (including public interest entities) and to tell those charged with governance which ethical and independence requirements were applied. It embeds references to the APES 110 Code into ASA 700 and ASA 260 and updates example report wording. Auditors and their firms bear the compliance cost of changing report text and governance communications; the auditor decides when such entity‑specific rules apply (operative for periods from 15 Dec 2024).
This instrument, Auditing Standard ASA 2025-1 Amendments to Australian Auditing Standards, amends two existing AUASB standards: ASA 700 Forming an Opinion and Reporting on a Financial Report, and ASA 260 Communication With Those Charged With Governance. Mechanically, the amending standard:
Inserts and revises specific requirements and explanatory material that require the auditor to identify the relevant ethical requirements applied to the audit and, where applicable, to state publicly when independence requirements that are specific to audits of certain entities have been applied (see amended Aus 28.1(c) and Aus 50.1(e); new Aus A36 and amended A36). The illustrative auditor’s report text in Appendix 1 (Aus Illustration 1A and 2A) is amended to show the new wording identifying APES 110 and the link to independence requirements for public interest entities (PIEs).
Requires the auditor to communicate to those charged with governance the relevant ethical requirements, including independence requirements, that the auditor applies to the engagement and to communicate, if applicable, any independence requirements specific to audits of certain entities (inserted paragraph 17 in ASA 260; amended A29 and Aus A29.1(c) reference).
Renumbers and updates consequential cross-references in the affected Standards (renumbering A36-A84 to A37-A85 and similar adjustments in ASA 260 paragraphs 17-24). The Standard uses underlining/strikethrough in the draft to show changes, but the operative text excludes those editorial marks (Amendments to Auditing Standards, paras 1-2).
The amending standard is expressly made by the AUASB under its statutory powers (Authority Statement: s 227B of the Australian Securities and Investments Commission Act 2001 and s 336 of the Corporations Act 2001) and is a legislative instrument under the Legislation Act 2003. It is operative for financial reporting periods commencing on or after 15 December 2024 (Operative Date). The Standard is presented as responsive to parallel changes made by the Accounting Professional & Ethical Standards Board (APESB) to APES 110 Code of Ethics for Professional Accountants (including Independence Standards), and it is stated to be consistent with changes made by the International Auditing and Assurance Standards Board (Conformity with International Standards on Auditing).
Current sections
Direct links to the current provisions in Auditing Standard ASA 2025-1 Amendments to Australian Auditing Standards.
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Obtaining a Copy of this Auditing Standa
Obtaining a Copy of this Auditing Standard
Obtaining a Copy of this Auditing Standard
This Auditing Standard is available on the Auditing and Assurance Standards Board (AUASB) website: www.auasb.gov.au
Contact Details
Contact Details
Contact Details
Auditing and Assurance Standards BoardPhone: (03) 8080 7400E-mail: enquiries@auasb.gov.auPostal Address:PO Box 204, Collins Street WestMelbourne Victoria 8007AUSTRALIA
Requests and enquiries concerning reproduction and rights for commercial purposes should be addressed to the Director - National, Auditing and Assurance Standards Board, PO Box 204, Collins Street West, Melbourne, Victoria 8007 or sent to enquiries@auasb.gov.au. Otherwise, no part of this Auditing Standard may be reproduced, stored or transmitted in any form or by any means without the prior written permission of the AUASB except as permitted by law.
ISSN 1833-4393
CONTENTS
CONTENTS
CONTENTS
PREFACE
AUTHORITY STATEMENT
CONFORMITY WITH INTERNATIONAL STANDARDS ON AUDITING
Requests and enquiries concerning reproduction and rights for commercial purposes should be addressed to the Director - National, Auditing and Assurance Standards Board, PO Box 204, Collins Street West, Melbourne, Victoria 8007 or sent to enquiries@auasb.gov.au. Otherwise, no part of this Auditing Standard may be reproduced, stored or transmitted in any form or by any means without the prior written permission of the AUASB except as permitted by law.
ISSN 1833-4393
CONTENTS
PREFACE
AUTHORITY STATEMENT
CONFORMITY WITH INTERNATIONAL STANDARDS ON AUDITING
Amendments to Auditing Standards............................................7-8
Amendments to ASA 700.....................................................9-16
Amendments to ASA 260....................................................17-23
preface
Reasons for Issuing ASA 2025-1
The AUASB issues Auditing Standard ASA 2025-1 Amendments to Australian Auditing Standards pursuant to the requirements of the legislative provisions and the Strategic Direction explained below.
The AUASB is a non-corporate Commonwealth entity of the Australian Government established under section 227A of the Australian Securities and Investments Commission Act 2001. Under section 336 of the Corporations Act 2001, the AUASB may make Auditing Standards for the purposes of the corporations legislation. These Auditing Standards are legislative instruments under the Legislation Act 2003.
Under the Strategic Direction given to the AUASB by the Financial Reporting Council, the AUASB is required, inter alia, to develop auditing standards that have a clear public interest focus and are of the highest quality.
Main Features
This Auditing Standard amends the requirements and application and other explanatory material and appendices of the following Auditing Standards:
ASA 700 Forming an Opinion and Reporting on a Financial Report (Issued December 2015 and amended to March 2023)
ASA 260 Communication With Those Charged With Governance (Issued December 2015 and amended to March 2021)
ASA 2025-1 amends:
ASA 700 in connection with disclosure concerning the application of auditor independence requirements in the Code in audit reports of public interest entities and certain other entities; and
ASA 260 to require the auditor to communicate to those charged with governance of an audited entity on the application of the auditor independence requirements.
AUTHORITY STATEMENT
The Auditing and Assurance Standards Board (AUASB) makes this Auditing Standard ASA 2025-1 Amendments to Australian Auditing Standards pursuant to section 227B of the Australian Securities and Investments Commission Act 2001 and section 336 of the Corporations Act 2001.
Dated: 28 January 2025 D Niven
Chair - AUASB
Conformity with International Standards on Auditing
This Auditing Standard makes amendments to other auditing standards that are consistent with changes made by the International Auditing and Assurance Standards Board to the equivalent International Standard on Auditing.
Reasons for Issuing ASA 2025-1
Reasons for Issuing ASA 2025-1
Reasons for Issuing ASA 2025-1
The AUASB issues Auditing Standard ASA 2025-1 Amendments to Australian Auditing Standards pursuant to the requirements of the legislative provisions and the Strategic Direction explained below.
The AUASB is a non-corporate Commonwealth entity of the Australian Government established under section 227A of the Australian Securities and Investments Commission Act 2001. Under section 336 of the Corporations Act 2001, the AUASB may make Auditing Standards for the purposes of the corporations legislation. These Auditing Standards are legislative instruments under the Legislation Act 2003.
Under the Strategic Direction given to the AUASB by the Financial Reporting Council, the AUASB is required, inter alia, to develop auditing standards that have a clear public interest focus and are of the highest quality.
Main Features
Main Features
Main Features
This Auditing Standard amends the requirements and application and other explanatory material and appendices of the following Auditing Standards:
ASA 700 Forming an Opinion and Reporting on a Financial Report (Issued December 2015 and amended to March 2023)
ASA 260 Communication With Those Charged With Governance (Issued December 2015 and amended to March 2021)
ASA 2025-1 amends:
ASA 700 in connection with disclosure concerning the application of auditor independence requirements in the Code in audit reports of public interest entities and certain other entities; and
ASA 260 to require the auditor to communicate to those charged with governance of an audited entity on the application of the auditor independence requirements.
AUTHORITY STATEMENT
The Auditing and Assurance Standards Board (AUASB) makes this Auditing Standard ASA 2025-1 Amendments to Australian Auditing Standards pursuant to section 227B of the Australian Securities and Investments Commission Act 2001 and section 336 of the Corporations Act 2001.
Dated: 28 January 2025 D Niven
Chair - AUASB
Conformity with International Standards on Auditing
This Auditing Standard makes amendments to other auditing standards that are consistent with changes made by the International Auditing and Assurance Standards Board to the equivalent International Standard on Auditing.
AUTHORITY STATEMENT
AUTHORITY STATEMENT
AUTHORITY STATEMENT
The Auditing and Assurance Standards Board (AUASB) makes this Auditing Standard ASA 2025-1 Amendments to Australian Auditing Standards pursuant to section 227B of the Australian Securities and Investments Commission Act 2001 and section 336 of the Corporations Act 2001.
Conformity with International Standards
Conformity with International Standards on Auditing
Conformity with International Standards on Auditing
This Auditing Standard makes amendments to other auditing standards that are consistent with changes made by the International Auditing and Assurance Standards Board to the equivalent International Standard on Auditing.
Auditing Standard ASA 2025-1
Auditing Standard ASA 2025-1
Auditing Standard ASA 2025-1
Amendments to Australian Auditing Standards
Application
This Auditing Standard applies to:
an audit of a financial report for a financial year, or an audit of a financial report for a half-year, in accordance with the Corporations Act 2001; and
an audit of a financial report, or a complete set of financial statements, for any other purpose.
This Auditing Standard also applies, as appropriate, to an audit of other historical financial information.
Operative Date
This Auditing Standard is operative for financial reporting periods commencing on or after 15 December 2024.
Introduction
Scope of this Auditing Standard
This Auditing Standard amends Australian Auditing Standards ASA 700 Forming an Opinion and Reporting on Financial Statements and ASA 260 Communication with Those Charged with Governance in relation to disclosing publicly the application of the independence requirements for certain entities, including Public Interest Entities (PIEs) and communicating on those matters to those charged with governance.
Objective
The objective of this Auditing Standard is to amend the following Auditing Standards in connection with disclosure concerning auditor independence in audit reports following changes made by the Accounting Professional & Ethical Standards Board (APESB) to APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) and communication to those charged with governance:
ASA 700 Forming an Opinion and Reporting on a Financial Report (Issued 1 December 2015 and amended to 31 March 2023); and
ASA 260 Communication With Those Charged With Governance (Issued 1 December 2015 and amended to 27 April 2022).
Definitions
For the purposes of this Auditing Standard, the meanings of terms are set out in each Auditing Standard and in the AUASB Glossary. This Auditing Standard does not introduce new definitions.
Amendments to Auditing Standards
Where relevant, this Standard uses underlining, striking out and other typographical material to identify the amendments to a Standard, in order to make the amendments more understandable. However, the amendments made by this Standard do not include that underlining, striking out or other typographical material. Amended paragraphs are shown with deleted text struck through and new text underlined. Ellipses (…) are used to help provide the context within which amendments are made and also to indicate text that is not amended.
Where this amending standard inserts or deletes a paragraph or footnote, as a result of that insertion or deletion relevant paragraph numbers, cross-references and footnotes are updated.
Amendments to ASA 700
Existing subparagraph Aus 28.1(c) is amended to read as follows:
Includes a statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit, and has fulfilled the auditor’s other ethical responsibilities in accordance with these requirements.
(i) The statement shall identify the relevant ethical requirements applicable within Australia; and (Ref: Para. Aus A34.1–A389)
(ii) If the relevant ethical requirements require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities, the statement shall indicate that the auditor is independent of the entity in accordance with the independence requirements applicable to the audits of those entities; and (Ref: Para. A36)
Existing subparagraph Aus 50.1(e) is amended to read as follows:
A statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit, and has fulfilled the auditor’s other ethical responsibilities requirements in accordance with these requirements.
(i) The statement shall identify the relevant ethical requirements applicable within Australia.
(ii) If the relevant ethical requirements require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities, the statement shall indicate that the auditor is independent of the entity in accordance with the independence requirements applicable to the audits of those entities.
Each of the existing paragraphs A36 to A84 are renumbered as paragraphs A37 to A85 respectively. All cross-references to those paragraphs are updated accordingly.
The following paragraph A36 is inserted following existing paragraph A35:
Relevant ethical requirements may:
(a) [Deleted by the AUASB. Refer to Aus A36.1(a).]
Aus A36.1(a) Establish independence requirements that are specific to audits of financial reports of certain entities specified in the relevant ethical requirements, such as the independence requirements for audits of financial reports of public interest entities in the APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code). Relevant ethical requirements may also require the auditor to determine whether it is appropriate to apply such independence requirements to audits of financial reports of entities other than those entities specified in the relevant ethical requirements.
(b) Require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities. For example, the Code requires that when a firm has applied the independence requirements for public interest entities in performing an audit of the financial reports of an entity, the firm publicly disclose that fact, unless making such disclosure would result in disclosing confidential future plans of the entity.[29]
ASA 260 sets out requirements and guidance about the auditor’s communication with those charged with governance, which includes communications for these cases.[30]
Existing paragraph A36 is amended to read as follows:
Law or regulation, Australian Auditing Standards or the terms of an audit engagement may also require the auditor to provide in the auditor’s report more specific information about the sources of the relevant ethical requirements, including those related to independence, that applied to the audit of the financial report.
Amendments to ASA 700 Appendix 1: [Aus] Illustration 1A and [Aus] Illustration 2A
The fifth point of [Aus] Illustration 1A and [Aus] Illustration 2A are amended as follows:
The relevant ethical requirements that apply to the audit are the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code). The Code includes independence requirements that are applicable to audits of financial reports of public interest entities. The Code also requires the auditor to publicly disclose that the independence requirements applicable to audits of financial reports of public interest entities were applied.
[Aus] Illustration 1A: Example Auditor’s Report for Single Company – Corporations Act 2001 (Fair Presentation Framework), is amended as follows:
INDEPENDENT AUDITOR’S REPORT
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional & Ethical Standards Board Limited (the Code) that are relevant to our audits of the financial report of public interest entities in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
…
[Aus] Illustration 2A: Example Auditor’s Report for Group Entity – Corporations Act 2001 (Fair Presentation Framework), is amended as follows:
INDEPENDENT AUDITOR’S REPORT
…
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional & Ethical Standards Board Limited (the Code) that are relevant to our audits of the financial report of public interest entities in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
…
Amendments to ASA 260
Each of the existing paragraphs 17 to 23 are renumbered as paragraphs 18 to 24 respectively. All cross-references to those paragraphs are updated accordingly.
The following paragraph 17 is inserted following existing sub-heading “Auditor Independence”:
The auditor shall communicate with those charged with governance the relevant ethical requirements, including those related to independence, that the auditor applies for the audit engagement, including if applicable in the circumstances, any independence requirements specific to audits of financial reports of certain entities. (Ref: Para. A29)
In renumbered existing paragraph 18(a)(ii) ‘A29’ is replaced by ‘A30’
Existing paragraph A29 and its heading are amended to read as follows:
Auditor Independence (Ref: Para. 17–18)
The auditor is required to comply with relevant ethical requirements, including those related to independence, relating to financial report audit engagements24 and to communicate with those charged with governance about the requirements the auditor applies. Relevant ethical requirements may:
Establish independence requirements that are specific to audits of financial reports of certain entities specified in the relevant ethical requirements, such as the independence requirements for audits of financial reports of public interest entities in the APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional & Ethical Standards Board Limited (the Code). If applicable in the circumstances of the audit engagement, this ASA requires that the auditor also communicates with those charged with governance that the auditor applies such independence requirements.
Require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities specified in the relevant ethical requirements. [1] ASA 700 addresses the requirements for the auditor’s report relating to the auditor’s independence and the relevant ethical requirements the auditor applied.[2]
[Deleted by the AUASB. Refer to Aus A29.1(c).]
Aus A29.1(c) Require the auditor to determine whether it is appropriate to apply independence requirements that are specific to audits of financial reports of certain entities to audits of financial reports of other entities not specified in the relevant ethical requirements.[3] If this is the case and the auditor is required to publicly disclose when the auditor applied such independence requirements, the auditor may discuss with management or those charged with governance whether there is a risk of misunderstanding the nature of the entity and any need for additional disclosure.
Existing paragraph A30 is amended to read as follows:
The communication about relationships and other matters, and how threats to independence that are not at an acceptable level have been addressed varies with the circumstances of the engagement and generally addresses the threats to independence, safeguards to reduce the threats, and measures to eliminate the circumstances that created the threats.
Delete paragraph A31.
Renumber existing Aus A31.1 as ‘A31’ and amend it to read as follows:
Relevant ethical requirements or law or regulation may also specify particular communications to those charged with governance in circumstances where breaches of independence requirements have been identified.* For example, the Code requires the auditor to communicate with those charged with governance in writing about any breach and the action the firm has taken or proposes to take[4].
Amendments to Australian Auditing Standa
Amendments to Australian Auditing Standards
Auditing Standard ASA 2025-1
Amendments to Australian Auditing Standards
Application
This Auditing Standard applies to:
an audit of a financial report for a financial year, or an audit of a financial report for a half-year, in accordance with the Corporations Act 2001; and
an audit of a financial report, or a complete set of financial statements, for any other purpose.
This Auditing Standard also applies, as appropriate, to an audit of other historical financial information.
Operative Date
This Auditing Standard is operative for financial reporting periods commencing on or after 15 December 2024.
Introduction
Scope of this Auditing Standard
This Auditing Standard amends Australian Auditing Standards ASA 700 Forming an Opinion and Reporting on Financial Statements and ASA 260 Communication with Those Charged with Governance in relation to disclosing publicly the application of the independence requirements for certain entities, including Public Interest Entities (PIEs) and communicating on those matters to those charged with governance.
Objective
The objective of this Auditing Standard is to amend the following Auditing Standards in connection with disclosure concerning auditor independence in audit reports following changes made by the Accounting Professional & Ethical Standards Board (APESB) to APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) and communication to those charged with governance:
ASA 700 Forming an Opinion and Reporting on a Financial Report (Issued 1 December 2015 and amended to 31 March 2023); and
ASA 260 Communication With Those Charged With Governance (Issued 1 December 2015 and amended to 27 April 2022).
Definitions
For the purposes of this Auditing Standard, the meanings of terms are set out in each Auditing Standard and in the AUASB Glossary. This Auditing Standard does not introduce new definitions.
Amendments to Auditing Standards
Where relevant, this Standard uses underlining, striking out and other typographical material to identify the amendments to a Standard, in order to make the amendments more understandable. However, the amendments made by this Standard do not include that underlining, striking out or other typographical material. Amended paragraphs are shown with deleted text struck through and new text underlined. Ellipses (…) are used to help provide the context within which amendments are made and also to indicate text that is not amended.
Where this amending standard inserts or deletes a paragraph or footnote, as a result of that insertion or deletion relevant paragraph numbers, cross-references and footnotes are updated.
Amendments to ASA 700
Existing subparagraph Aus 28.1(c) is amended to read as follows:
Includes a statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit, and has fulfilled the auditor’s other ethical responsibilities in accordance with these requirements.
(i) The statement shall identify the relevant ethical requirements applicable within Australia; and (Ref: Para. Aus A34.1–A389)
(ii) If the relevant ethical requirements require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities, the statement shall indicate that the auditor is independent of the entity in accordance with the independence requirements applicable to the audits of those entities; and (Ref: Para. A36)
Existing subparagraph Aus 50.1(e) is amended to read as follows:
A statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit, and has fulfilled the auditor’s other ethical responsibilities requirements in accordance with these requirements.
(i) The statement shall identify the relevant ethical requirements applicable within Australia.
(ii) If the relevant ethical requirements require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities, the statement shall indicate that the auditor is independent of the entity in accordance with the independence requirements applicable to the audits of those entities.
Each of the existing paragraphs A36 to A84 are renumbered as paragraphs A37 to A85 respectively. All cross-references to those paragraphs are updated accordingly.
The following paragraph A36 is inserted following existing paragraph A35:
Relevant ethical requirements may:
(a) [Deleted by the AUASB. Refer to Aus A36.1(a).]
Aus A36.1(a) Establish independence requirements that are specific to audits of financial reports of certain entities specified in the relevant ethical requirements, such as the independence requirements for audits of financial reports of public interest entities in the APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code). Relevant ethical requirements may also require the auditor to determine whether it is appropriate to apply such independence requirements to audits of financial reports of entities other than those entities specified in the relevant ethical requirements.
(b) Require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities. For example, the Code requires that when a firm has applied the independence requirements for public interest entities in performing an audit of the financial reports of an entity, the firm publicly disclose that fact, unless making such disclosure would result in disclosing confidential future plans of the entity.[29]
ASA 260 sets out requirements and guidance about the auditor’s communication with those charged with governance, which includes communications for these cases.[30]
Existing paragraph A36 is amended to read as follows:
Law or regulation, Australian Auditing Standards or the terms of an audit engagement may also require the auditor to provide in the auditor’s report more specific information about the sources of the relevant ethical requirements, including those related to independence, that applied to the audit of the financial report.
Amendments to ASA 700 Appendix 1: [Aus] Illustration 1A and [Aus] Illustration 2A
The fifth point of [Aus] Illustration 1A and [Aus] Illustration 2A are amended as follows:
The relevant ethical requirements that apply to the audit are the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code). The Code includes independence requirements that are applicable to audits of financial reports of public interest entities. The Code also requires the auditor to publicly disclose that the independence requirements applicable to audits of financial reports of public interest entities were applied.
[Aus] Illustration 1A: Example Auditor’s Report for Single Company – Corporations Act 2001 (Fair Presentation Framework), is amended as follows:
INDEPENDENT AUDITOR’S REPORT
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional & Ethical Standards Board Limited (the Code) that are relevant to our audits of the financial report of public interest entities in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
…
[Aus] Illustration 2A: Example Auditor’s Report for Group Entity – Corporations Act 2001 (Fair Presentation Framework), is amended as follows:
INDEPENDENT AUDITOR’S REPORT
…
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional & Ethical Standards Board Limited (the Code) that are relevant to our audits of the financial report of public interest entities in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
…
Amendments to ASA 260
Each of the existing paragraphs 17 to 23 are renumbered as paragraphs 18 to 24 respectively. All cross-references to those paragraphs are updated accordingly.
The following paragraph 17 is inserted following existing sub-heading “Auditor Independence”:
The auditor shall communicate with those charged with governance the relevant ethical requirements, including those related to independence, that the auditor applies for the audit engagement, including if applicable in the circumstances, any independence requirements specific to audits of financial reports of certain entities. (Ref: Para. A29)
In renumbered existing paragraph 18(a)(ii) ‘A29’ is replaced by ‘A30’
Existing paragraph A29 and its heading are amended to read as follows:
Auditor Independence (Ref: Para. 17–18)
The auditor is required to comply with relevant ethical requirements, including those related to independence, relating to financial report audit engagements24 and to communicate with those charged with governance about the requirements the auditor applies. Relevant ethical requirements may:
Establish independence requirements that are specific to audits of financial reports of certain entities specified in the relevant ethical requirements, such as the independence requirements for audits of financial reports of public interest entities in the APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional & Ethical Standards Board Limited (the Code). If applicable in the circumstances of the audit engagement, this ASA requires that the auditor also communicates with those charged with governance that the auditor applies such independence requirements.
Require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities specified in the relevant ethical requirements. [1] ASA 700 addresses the requirements for the auditor’s report relating to the auditor’s independence and the relevant ethical requirements the auditor applied.[2]
[Deleted by the AUASB. Refer to Aus A29.1(c).]
Aus A29.1(c) Require the auditor to determine whether it is appropriate to apply independence requirements that are specific to audits of financial reports of certain entities to audits of financial reports of other entities not specified in the relevant ethical requirements.[3] If this is the case and the auditor is required to publicly disclose when the auditor applied such independence requirements, the auditor may discuss with management or those charged with governance whether there is a risk of misunderstanding the nature of the entity and any need for additional disclosure.
Existing paragraph A30 is amended to read as follows:
The communication about relationships and other matters, and how threats to independence that are not at an acceptable level have been addressed varies with the circumstances of the engagement and generally addresses the threats to independence, safeguards to reduce the threats, and measures to eliminate the circumstances that created the threats.
Delete paragraph A31.
Renumber existing Aus A31.1 as ‘A31’ and amend it to read as follows:
Relevant ethical requirements or law or regulation may also specify particular communications to those charged with governance in circumstances where breaches of independence requirements have been identified.* For example, the Code requires the auditor to communicate with those charged with governance in writing about any breach and the action the firm has taken or proposes to take[4].
Application
Application
Application
This Auditing Standard applies to:
an audit of a financial report for a financial year, or an audit of a financial report for a half-year, in accordance with the Corporations Act 2001; and
an audit of a financial report, or a complete set of financial statements, for any other purpose.
This Auditing Standard also applies, as appropriate, to an audit of other historical financial information.
Operative Date
Operative Date
Operative Date
This Auditing Standard is operative for financial reporting periods commencing on or after 15 December 2024.
Introduction
Introduction
Auditing Standard ASA 2025-1
Amendments to Australian Auditing Standards
Application
This Auditing Standard applies to:
an audit of a financial report for a financial year, or an audit of a financial report for a half-year, in accordance with the Corporations Act 2001; and
an audit of a financial report, or a complete set of financial statements, for any other purpose.
This Auditing Standard also applies, as appropriate, to an audit of other historical financial information.
Operative Date
This Auditing Standard is operative for financial reporting periods commencing on or after 15 December 2024.
Introduction
Scope of this Auditing Standard
This Auditing Standard amends Australian Auditing Standards ASA 700 Forming an Opinion and Reporting on Financial Statements and ASA 260 Communication with Those Charged with Governance in relation to disclosing publicly the application of the independence requirements for certain entities, including Public Interest Entities (PIEs) and communicating on those matters to those charged with governance.
Objective
The objective of this Auditing Standard is to amend the following Auditing Standards in connection with disclosure concerning auditor independence in audit reports following changes made by the Accounting Professional & Ethical Standards Board (APESB) to APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) and communication to those charged with governance:
ASA 700 Forming an Opinion and Reporting on a Financial Report (Issued 1 December 2015 and amended to 31 March 2023); and
ASA 260 Communication With Those Charged With Governance (Issued 1 December 2015 and amended to 27 April 2022).
Definitions
For the purposes of this Auditing Standard, the meanings of terms are set out in each Auditing Standard and in the AUASB Glossary. This Auditing Standard does not introduce new definitions.
Amendments to Auditing Standards
Where relevant, this Standard uses underlining, striking out and other typographical material to identify the amendments to a Standard, in order to make the amendments more understandable. However, the amendments made by this Standard do not include that underlining, striking out or other typographical material. Amended paragraphs are shown with deleted text struck through and new text underlined. Ellipses (…) are used to help provide the context within which amendments are made and also to indicate text that is not amended.
Where this amending standard inserts or deletes a paragraph or footnote, as a result of that insertion or deletion relevant paragraph numbers, cross-references and footnotes are updated.
Amendments to ASA 700
Existing subparagraph Aus 28.1(c) is amended to read as follows:
Includes a statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit, and has fulfilled the auditor’s other ethical responsibilities in accordance with these requirements.
(i) The statement shall identify the relevant ethical requirements applicable within Australia; and (Ref: Para. Aus A34.1–A389)
(ii) If the relevant ethical requirements require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities, the statement shall indicate that the auditor is independent of the entity in accordance with the independence requirements applicable to the audits of those entities; and (Ref: Para. A36)
Existing subparagraph Aus 50.1(e) is amended to read as follows:
A statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit, and has fulfilled the auditor’s other ethical responsibilities requirements in accordance with these requirements.
(i) The statement shall identify the relevant ethical requirements applicable within Australia.
(ii) If the relevant ethical requirements require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities, the statement shall indicate that the auditor is independent of the entity in accordance with the independence requirements applicable to the audits of those entities.
Each of the existing paragraphs A36 to A84 are renumbered as paragraphs A37 to A85 respectively. All cross-references to those paragraphs are updated accordingly.
The following paragraph A36 is inserted following existing paragraph A35:
Relevant ethical requirements may:
(a) [Deleted by the AUASB. Refer to Aus A36.1(a).]
Aus A36.1(a) Establish independence requirements that are specific to audits of financial reports of certain entities specified in the relevant ethical requirements, such as the independence requirements for audits of financial reports of public interest entities in the APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code). Relevant ethical requirements may also require the auditor to determine whether it is appropriate to apply such independence requirements to audits of financial reports of entities other than those entities specified in the relevant ethical requirements.
(b) Require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities. For example, the Code requires that when a firm has applied the independence requirements for public interest entities in performing an audit of the financial reports of an entity, the firm publicly disclose that fact, unless making such disclosure would result in disclosing confidential future plans of the entity.[29]
ASA 260 sets out requirements and guidance about the auditor’s communication with those charged with governance, which includes communications for these cases.[30]
Existing paragraph A36 is amended to read as follows:
Law or regulation, Australian Auditing Standards or the terms of an audit engagement may also require the auditor to provide in the auditor’s report more specific information about the sources of the relevant ethical requirements, including those related to independence, that applied to the audit of the financial report.
Amendments to ASA 700 Appendix 1: [Aus] Illustration 1A and [Aus] Illustration 2A
The fifth point of [Aus] Illustration 1A and [Aus] Illustration 2A are amended as follows:
The relevant ethical requirements that apply to the audit are the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code). The Code includes independence requirements that are applicable to audits of financial reports of public interest entities. The Code also requires the auditor to publicly disclose that the independence requirements applicable to audits of financial reports of public interest entities were applied.
[Aus] Illustration 1A: Example Auditor’s Report for Single Company – Corporations Act 2001 (Fair Presentation Framework), is amended as follows:
INDEPENDENT AUDITOR’S REPORT
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional & Ethical Standards Board Limited (the Code) that are relevant to our audits of the financial report of public interest entities in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
…
[Aus] Illustration 2A: Example Auditor’s Report for Group Entity – Corporations Act 2001 (Fair Presentation Framework), is amended as follows:
INDEPENDENT AUDITOR’S REPORT
…
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional & Ethical Standards Board Limited (the Code) that are relevant to our audits of the financial report of public interest entities in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
…
Amendments to ASA 260
Each of the existing paragraphs 17 to 23 are renumbered as paragraphs 18 to 24 respectively. All cross-references to those paragraphs are updated accordingly.
The following paragraph 17 is inserted following existing sub-heading “Auditor Independence”:
The auditor shall communicate with those charged with governance the relevant ethical requirements, including those related to independence, that the auditor applies for the audit engagement, including if applicable in the circumstances, any independence requirements specific to audits of financial reports of certain entities. (Ref: Para. A29)
In renumbered existing paragraph 18(a)(ii) ‘A29’ is replaced by ‘A30’
Existing paragraph A29 and its heading are amended to read as follows:
Auditor Independence (Ref: Para. 17–18)
The auditor is required to comply with relevant ethical requirements, including those related to independence, relating to financial report audit engagements24 and to communicate with those charged with governance about the requirements the auditor applies. Relevant ethical requirements may:
Establish independence requirements that are specific to audits of financial reports of certain entities specified in the relevant ethical requirements, such as the independence requirements for audits of financial reports of public interest entities in the APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional & Ethical Standards Board Limited (the Code). If applicable in the circumstances of the audit engagement, this ASA requires that the auditor also communicates with those charged with governance that the auditor applies such independence requirements.
Require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities specified in the relevant ethical requirements. [1] ASA 700 addresses the requirements for the auditor’s report relating to the auditor’s independence and the relevant ethical requirements the auditor applied.[2]
[Deleted by the AUASB. Refer to Aus A29.1(c).]
Aus A29.1(c) Require the auditor to determine whether it is appropriate to apply independence requirements that are specific to audits of financial reports of certain entities to audits of financial reports of other entities not specified in the relevant ethical requirements.[3] If this is the case and the auditor is required to publicly disclose when the auditor applied such independence requirements, the auditor may discuss with management or those charged with governance whether there is a risk of misunderstanding the nature of the entity and any need for additional disclosure.
Existing paragraph A30 is amended to read as follows:
The communication about relationships and other matters, and how threats to independence that are not at an acceptable level have been addressed varies with the circumstances of the engagement and generally addresses the threats to independence, safeguards to reduce the threats, and measures to eliminate the circumstances that created the threats.
Delete paragraph A31.
Renumber existing Aus A31.1 as ‘A31’ and amend it to read as follows:
Relevant ethical requirements or law or regulation may also specify particular communications to those charged with governance in circumstances where breaches of independence requirements have been identified.* For example, the Code requires the auditor to communicate with those charged with governance in writing about any breach and the action the firm has taken or proposes to take[4].
Scope of this Auditing Standard
Scope of this Auditing Standard
Scope of this Auditing Standard
This Auditing Standard amends Australian Auditing Standards ASA 700 Forming an Opinion and Reporting on Financial Statements and ASA 260 Communication with Those Charged with Governance in relation to disclosing publicly the application of the independence requirements for certain entities, including Public Interest Entities (PIEs) and communicating on those matters to those charged with governance.
Objective
Objective
Objective
The objective of this Auditing Standard is to amend the following Auditing Standards in connection with disclosure concerning auditor independence in audit reports following changes made by the Accounting Professional & Ethical Standards Board (APESB) to APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) and communication to those charged with governance:
ASA 700 Forming an Opinion and Reporting on a Financial Report (Issued 1 December 2015 and amended to 31 March 2023); and
ASA 260 Communication With Those Charged With Governance (Issued 1 December 2015 and amended to 27 April 2022).
Definitions
Definitions
Definitions
For the purposes of this Auditing Standard, the meanings of terms are set out in each Auditing Standard and in the AUASB Glossary. This Auditing Standard does not introduce new definitions.
Amendments to Auditing Standards
Amendments to Auditing Standards
Amendments to Auditing Standards
Where relevant, this Standard uses underlining, striking out and other typographical material to identify the amendments to a Standard, in order to make the amendments more understandable. However, the amendments made by this Standard do not include that underlining, striking out or other typographical material. Amended paragraphs are shown with deleted text struck through and new text underlined. Ellipses (…) are used to help provide the context within which amendments are made and also to indicate text that is not amended.
Where this amending standard inserts or deletes a paragraph or footnote, as a result of that insertion or deletion relevant paragraph numbers, cross-references and footnotes are updated.
Amendments to ASA 700
Amendments to ASA 700
Amendments to ASA 700
Existing subparagraph Aus 28.1(c) is amended to read as follows:
Includes a statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit, and has fulfilled the auditor’s other ethical responsibilities in accordance with these requirements.
(i) The statement shall identify the relevant ethical requirements applicable within Australia; and (Ref: Para. Aus A34.1–A389)
(ii) If the relevant ethical requirements require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities, the statement shall indicate that the auditor is independent of the entity in accordance with the independence requirements applicable to the audits of those entities; and (Ref: Para. A36)
Existing subparagraph Aus 50.1(e) is amended to read as follows:
A statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit, and has fulfilled the auditor’s other ethical responsibilities requirements in accordance with these requirements.
(i) The statement shall identify the relevant ethical requirements applicable within Australia.
(ii) If the relevant ethical requirements require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities, the statement shall indicate that the auditor is independent of the entity in accordance with the independence requirements applicable to the audits of those entities.
Each of the existing paragraphs A36 to A84 are renumbered as paragraphs A37 to A85 respectively. All cross-references to those paragraphs are updated accordingly.
The following paragraph A36 is inserted following existing paragraph A35:
Relevant ethical requirements may:
(a) [Deleted by the AUASB. Refer to Aus A36.1(a).]
Aus A36.1(a) Establish independence requirements that are specific to audits of financial reports of certain entities specified in the relevant ethical requirements, such as the independence requirements for audits of financial reports of public interest entities in the APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code). Relevant ethical requirements may also require the auditor to determine whether it is appropriate to apply such independence requirements to audits of financial reports of entities other than those entities specified in the relevant ethical requirements.
(b) Require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities. For example, the Code requires that when a firm has applied the independence requirements for public interest entities in performing an audit of the financial reports of an entity, the firm publicly disclose that fact, unless making such disclosure would result in disclosing confidential future plans of the entity.[29]
ASA 260 sets out requirements and guidance about the auditor’s communication with those charged with governance, which includes communications for these cases.[30]
Existing paragraph A36 is amended to read as follows:
Law or regulation, Australian Auditing Standards or the terms of an audit engagement may also require the auditor to provide in the auditor’s report more specific information about the sources of the relevant ethical requirements, including those related to independence, that applied to the audit of the financial report.
Amendments to ASA 700 Appendix 1: [Aus] Illustration 1A and [Aus] Illustration 2A
The fifth point of [Aus] Illustration 1A and [Aus] Illustration 2A are amended as follows:
The relevant ethical requirements that apply to the audit are the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code). The Code includes independence requirements that are applicable to audits of financial reports of public interest entities. The Code also requires the auditor to publicly disclose that the independence requirements applicable to audits of financial reports of public interest entities were applied.
[Aus] Illustration 1A: Example Auditor’s Report for Single Company – Corporations Act 2001 (Fair Presentation Framework), is amended as follows:
INDEPENDENT AUDITOR’S REPORT
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional & Ethical Standards Board Limited (the Code) that are relevant to our audits of the financial report of public interest entities in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
…
[Aus] Illustration 2A: Example Auditor’s Report for Group Entity – Corporations Act 2001 (Fair Presentation Framework), is amended as follows:
INDEPENDENT AUDITOR’S REPORT
…
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional & Ethical Standards Board Limited (the Code) that are relevant to our audits of the financial report of public interest entities in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
…
…
Auditing Standard ASA 2025-1
Amendments to Australian Auditing Standards
Application
This Auditing Standard applies to:
an audit of a financial report for a financial year, or an audit of a financial report for a half-year, in accordance with the Corporations Act 2001; and
an audit of a financial report, or a complete set of financial statements, for any other purpose.
This Auditing Standard also applies, as appropriate, to an audit of other historical financial information.
Operative Date
This Auditing Standard is operative for financial reporting periods commencing on or after 15 December 2024.
Introduction
Scope of this Auditing Standard
This Auditing Standard amends Australian Auditing Standards ASA 700 Forming an Opinion and Reporting on Financial Statements and ASA 260 Communication with Those Charged with Governance in relation to disclosing publicly the application of the independence requirements for certain entities, including Public Interest Entities (PIEs) and communicating on those matters to those charged with governance.
Objective
The objective of this Auditing Standard is to amend the following Auditing Standards in connection with disclosure concerning auditor independence in audit reports following changes made by the Accounting Professional & Ethical Standards Board (APESB) to APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) and communication to those charged with governance:
ASA 700 Forming an Opinion and Reporting on a Financial Report (Issued 1 December 2015 and amended to 31 March 2023); and
ASA 260 Communication With Those Charged With Governance (Issued 1 December 2015 and amended to 27 April 2022).
Definitions
For the purposes of this Auditing Standard, the meanings of terms are set out in each Auditing Standard and in the AUASB Glossary. This Auditing Standard does not introduce new definitions.
Amendments to Auditing Standards
Where relevant, this Standard uses underlining, striking out and other typographical material to identify the amendments to a Standard, in order to make the amendments more understandable. However, the amendments made by this Standard do not include that underlining, striking out or other typographical material. Amended paragraphs are shown with deleted text struck through and new text underlined. Ellipses (…) are used to help provide the context within which amendments are made and also to indicate text that is not amended.
Where this amending standard inserts or deletes a paragraph or footnote, as a result of that insertion or deletion relevant paragraph numbers, cross-references and footnotes are updated.
Amendments to ASA 700
Existing subparagraph Aus 28.1(c) is amended to read as follows:
Includes a statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit, and has fulfilled the auditor’s other ethical responsibilities in accordance with these requirements.
(i) The statement shall identify the relevant ethical requirements applicable within Australia; and (Ref: Para. Aus A34.1–A389)
(ii) If the relevant ethical requirements require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities, the statement shall indicate that the auditor is independent of the entity in accordance with the independence requirements applicable to the audits of those entities; and (Ref: Para. A36)
Existing subparagraph Aus 50.1(e) is amended to read as follows:
A statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit, and has fulfilled the auditor’s other ethical responsibilities requirements in accordance with these requirements.
(i) The statement shall identify the relevant ethical requirements applicable within Australia.
(ii) If the relevant ethical requirements require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities, the statement shall indicate that the auditor is independent of the entity in accordance with the independence requirements applicable to the audits of those entities.
Each of the existing paragraphs A36 to A84 are renumbered as paragraphs A37 to A85 respectively. All cross-references to those paragraphs are updated accordingly.
The following paragraph A36 is inserted following existing paragraph A35:
Relevant ethical requirements may:
(a) [Deleted by the AUASB. Refer to Aus A36.1(a).]
Aus A36.1(a) Establish independence requirements that are specific to audits of financial reports of certain entities specified in the relevant ethical requirements, such as the independence requirements for audits of financial reports of public interest entities in the APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code). Relevant ethical requirements may also require the auditor to determine whether it is appropriate to apply such independence requirements to audits of financial reports of entities other than those entities specified in the relevant ethical requirements.
(b) Require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities. For example, the Code requires that when a firm has applied the independence requirements for public interest entities in performing an audit of the financial reports of an entity, the firm publicly disclose that fact, unless making such disclosure would result in disclosing confidential future plans of the entity.[29]
ASA 260 sets out requirements and guidance about the auditor’s communication with those charged with governance, which includes communications for these cases.[30]
Existing paragraph A36 is amended to read as follows:
Law or regulation, Australian Auditing Standards or the terms of an audit engagement may also require the auditor to provide in the auditor’s report more specific information about the sources of the relevant ethical requirements, including those related to independence, that applied to the audit of the financial report.
Amendments to ASA 700 Appendix 1: [Aus] Illustration 1A and [Aus] Illustration 2A
The fifth point of [Aus] Illustration 1A and [Aus] Illustration 2A are amended as follows:
The relevant ethical requirements that apply to the audit are the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code). The Code includes independence requirements that are applicable to audits of financial reports of public interest entities. The Code also requires the auditor to publicly disclose that the independence requirements applicable to audits of financial reports of public interest entities were applied.
[Aus] Illustration 1A: Example Auditor’s Report for Single Company – Corporations Act 2001 (Fair Presentation Framework), is amended as follows:
INDEPENDENT AUDITOR’S REPORT
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional & Ethical Standards Board Limited (the Code) that are relevant to our audits of the financial report of public interest entities in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
…
[Aus] Illustration 2A: Example Auditor’s Report for Group Entity – Corporations Act 2001 (Fair Presentation Framework), is amended as follows:
INDEPENDENT AUDITOR’S REPORT
…
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional & Ethical Standards Board Limited (the Code) that are relevant to our audits of the financial report of public interest entities in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
…
Amendments to ASA 260
Each of the existing paragraphs 17 to 23 are renumbered as paragraphs 18 to 24 respectively. All cross-references to those paragraphs are updated accordingly.
The following paragraph 17 is inserted following existing sub-heading “Auditor Independence”:
The auditor shall communicate with those charged with governance the relevant ethical requirements, including those related to independence, that the auditor applies for the audit engagement, including if applicable in the circumstances, any independence requirements specific to audits of financial reports of certain entities. (Ref: Para. A29)
In renumbered existing paragraph 18(a)(ii) ‘A29’ is replaced by ‘A30’
Existing paragraph A29 and its heading are amended to read as follows:
Auditor Independence (Ref: Para. 17–18)
The auditor is required to comply with relevant ethical requirements, including those related to independence, relating to financial report audit engagements24 and to communicate with those charged with governance about the requirements the auditor applies. Relevant ethical requirements may:
Establish independence requirements that are specific to audits of financial reports of certain entities specified in the relevant ethical requirements, such as the independence requirements for audits of financial reports of public interest entities in the APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional & Ethical Standards Board Limited (the Code). If applicable in the circumstances of the audit engagement, this ASA requires that the auditor also communicates with those charged with governance that the auditor applies such independence requirements.
Require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities specified in the relevant ethical requirements. [1] ASA 700 addresses the requirements for the auditor’s report relating to the auditor’s independence and the relevant ethical requirements the auditor applied.[2]
[Deleted by the AUASB. Refer to Aus A29.1(c).]
Aus A29.1(c) Require the auditor to determine whether it is appropriate to apply independence requirements that are specific to audits of financial reports of certain entities to audits of financial reports of other entities not specified in the relevant ethical requirements.[3] If this is the case and the auditor is required to publicly disclose when the auditor applied such independence requirements, the auditor may discuss with management or those charged with governance whether there is a risk of misunderstanding the nature of the entity and any need for additional disclosure.
Existing paragraph A30 is amended to read as follows:
The communication about relationships and other matters, and how threats to independence that are not at an acceptable level have been addressed varies with the circumstances of the engagement and generally addresses the threats to independence, safeguards to reduce the threats, and measures to eliminate the circumstances that created the threats.
Delete paragraph A31.
Renumber existing Aus A31.1 as ‘A31’ and amend it to read as follows:
Relevant ethical requirements or law or regulation may also specify particular communications to those charged with governance in circumstances where breaches of independence requirements have been identified.* For example, the Code requires the auditor to communicate with those charged with governance in writing about any breach and the action the firm has taken or proposes to take[4].
Amendments to ASA 260
Amendments to ASA 260
Amendments to ASA 260
Each of the existing paragraphs 17 to 23 are renumbered as paragraphs 18 to 24 respectively. All cross-references to those paragraphs are updated accordingly.
The following paragraph 17 is inserted following existing sub-heading “Auditor Independence”:
The auditor shall communicate with those charged with governance the relevant ethical requirements, including those related to independence, that the auditor applies for the audit engagement, including if applicable in the circumstances, any independence requirements specific to audits of financial reports of certain entities. (Ref: Para. A29)
In renumbered existing paragraph 18(a)(ii) ‘A29’ is replaced by ‘A30’
Existing paragraph A29 and its heading are amended to read as follows:
Auditor Independence (Ref: Para. 17–18)
The auditor is required to comply with relevant ethical requirements, including those related to independence, relating to financial report audit engagements24 and to communicate with those charged with governance about the requirements the auditor applies. Relevant ethical requirements may:
Establish independence requirements that are specific to audits of financial reports of certain entities specified in the relevant ethical requirements, such as the independence requirements for audits of financial reports of public interest entities in the APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional & Ethical Standards Board Limited (the Code). If applicable in the circumstances of the audit engagement, this ASA requires that the auditor also communicates with those charged with governance that the auditor applies such independence requirements.
Require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities specified in the relevant ethical requirements. [1] ASA 700 addresses the requirements for the auditor’s report relating to the auditor’s independence and the relevant ethical requirements the auditor applied.[2]
[Deleted by the AUASB. Refer to Aus A29.1(c).]
Aus A29.1(c) Require the auditor to determine whether it is appropriate to apply independence requirements that are specific to audits of financial reports of certain entities to audits of financial reports of other entities not specified in the relevant ethical requirements.[3] If this is the case and the auditor is required to publicly disclose when the auditor applied such independence requirements, the auditor may discuss with management or those charged with governance whether there is a risk of misunderstanding the nature of the entity and any need for additional disclosure.
Existing paragraph A30 is amended to read as follows:
The communication about relationships and other matters, and how threats to independence that are not at an acceptable level have been addressed varies with the circumstances of the engagement and generally addresses the threats to independence, safeguards to reduce the threats, and measures to eliminate the circumstances that created the threats.
Delete paragraph A31.
Renumber existing Aus A31.1 as ‘A31’ and amend it to read as follows:
Relevant ethical requirements or law or regulation may also specify particular communications to those charged with governance in circumstances where breaches of independence requirements have been identified.* For example, the Code requires the auditor to communicate with those charged with governance in writing about any breach and the action the firm has taken or proposes to take[4].
Source text: opening excerpt
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ISSN 1833-4393
CONTENTS CONTENTS
CONTENTS
PREFACE
AUTHORITY STATEMENT
CONFORMITY WITH INTERNATIONAL STANDARDS ON AUDITING
Amendments to Auditing Standards............................................7-8
Amendments to ASA 700.....................................................9-16
Amendments to ASA 260....................................................17-23
Officially, the Amendment’s stated objective is to align ASA 700 and ASA 260 with APES 110 changes requiring public disclosure in some circumstances and additional communication to those charged with governance about the ethical requirements and independence matters applied in audits (Objective; Scope of this Auditing Standard). The Standard therefore creates express duties for auditors to identify which ethical requirements they have applied, to disclose that fact in the auditor’s report where the ethical requirements themselves require public disclosure, and to communicate those choices directly to those charged with governance.
Main concepts
The amending standard rests on three core concepts: identification of applicable ethical requirements, public disclosure when independence rules of a subset of audits have been applied, and communication with governance about those ethical requirements.
Identification of the relevant ethical requirements
The amended Aus 28.1(c) and Aus 50.1(e) require the auditor’s report to include a statement that the auditor is independent in accordance with the "relevant ethical requirements applicable within Australia", and to identify those requirements. The illustrative wording shown in the amended Appendices identifies the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) and the Corporations Act 2001 as the relevant ethical/legal frameworks to be identified in the auditor’s report (Amendments to ASA 700; Amendments to ASA 700 Appendix 1).
Public disclosure of application of independence requirements specific to certain entities
The new Aus A36 explains that relevant ethical requirements may both (a) establish independence requirements that are specific to audits of financial reports of certain entities (for example, independence requirements applicable to PIEs in APES 110); and (b) require the auditor to publicly disclose when they applied those independence requirements (Aus A36.1(a) and Aus A36.1(b)). The example given is that APES 110 requires a firm that has applied PIE-specific independence requirements to publicly disclose that fact, subject to an exception where disclosure would reveal confidential future plans of the entity (Aus A36.1(b); see also Illustrations).
Communication to those charged with governance
ASA 260 is amended by inserting paragraph 17 requiring the auditor to "communicate with those charged with governance the relevant ethical requirements, including those related to independence, that the auditor applies for the audit engagement, including if applicable in the circumstances, any independence requirements specific to audits of financial reports of certain entities" (Amendments to ASA 260, inserted para 17). The related explanatory paragraph A29 is amended to describe that auditors must comply with the relevant ethical requirements and communicate which requirements they apply, including where the auditor elects or is required to apply independence requirements specific to certain entities (Amendments to ASA 260, amended A29; Aus A29.1(c)).
Ancillary technical matters
The standard renumbers existing explanatory paragraphs and deletes or renames some Aus/A paragraphs to reflect the insertion of new material and updated cross-references (Amendments to Auditing Standards paras 1-2; Amendments to ASA 700 and ASA 260).
The illustrative auditor’s report examples in ASA 700 Appendix 1 are updated to show the new phrasing auditors are to use in the "Basis for Opinion" section when the Code's PIE-related independence requirements are relevant (Amendments to ASA 700 Appendix 1).
Taken together, these changes make explicit in the Australian auditing standards both a public-facing disclosure duty (subject to conditions in APES 110) and an internal governance communication duty about the specific ethical frameworks and independence regimes the auditor is applying to a given audit engagement.
Who it affects
Primary affected parties named in the instrument are auditors and audit firms that perform audits of financial reports, the entities they audit (including but not limited to public interest entities), and those charged with governance of audited entities.
Auditors and audit firms
The amendments impose content obligations on the auditor’s public report (ASA 700 amendments) and on practitioner communications with governance (ASA 260 amendments). Auditors performing audits "in accordance with the Corporations Act 2001" are within scope, since the Standard explicitly applies to audits of financial reports for financial years or half-years in accordance with the Corporations Act, and also to audits for other purposes and other historical financial information as appropriate (Application, para 1; Application para 2). The AUASB makes this Standard under statutory powers (Authority Statement), so auditors who report under the Corporations Act will need to consider the amended requirements.
Public interest entities (PIEs) and other entities
The changes are targeted at cases where the Code (APES 110) contains independence requirements specific to certain entities, explicitly including "public interest entities" as the example. The text instructs auditors to identify the ethical requirements applicable in Australia and to indicate where independence requirements specific to audits of certain entities were applied (Aus A36.1(a)-(b)). Therefore, PIEs and any other class of entity specified in APES 110 that triggers special independence requirements are directly implicated. The amendments also cover situations where the auditor determines it appropriate to apply those entity-specific independence requirements to entities not specified in the Code (Aus A36.1(a) and Aus A29.1(c)), so non-PIE entities may be affected if auditors choose to apply PIE-type independence rules.
Those charged with governance
ASA 260’s insertion of paragraph 17 explicitly requires auditors to communicate to those charged with governance the relevant ethical requirements being applied on the engagement, including any entity-specific independence requirements, and to discuss related issues such as breaches and remedial action where applicable (Amendments to ASA 260, para 17; amended Aus A31). The Standard therefore imposes a documented communication obligation on auditors to governance bodies such as audit committees or boards.
Standard setters and professional bodies
The AUASB and APESB are both referenced: the AUASB issues the Auditing Standard (Authority Statement; Reasons for Issuing ASA 2025-1), and APES 110 is the ethical Code referenced as the relevant ethical requirements (Amendments to ASA 700 Appendix 1; Aus A36.1(b)). The standard expressly aligns with APES 110 amendments and with equivalent ISA changes (Conformity with International Standards on Auditing).
Users of financial statements and regulators (indirectly affected)
Users of auditor reports will see an explicit identification of the ethical framework applied and, when required by the Code, a public statement that PIE-specific independence requirements were applied. While the Standard does not create new legal rights for users, it alters the content of auditor reporting and governance communications available to users and regulators.
Geographic and temporal coverage
The Standard is framed as applicable "within Australia" (identifying the relevant ethical requirements applicable within Australia) and is operative for financial reporting periods commencing on or after 15 December 2024 (Operative Date). The AUASB is a non-corporate Commonwealth entity established under s 227A of the Australian Securities and Investments Commission Act 2001 and is empowered to make auditing standards under s 336 of the Corporations Act 2001 (Preface; Authority Statement). Therefore the affected population is Australian audit engagements falling in scope under the Corporations Act and other audits to which the AUASB standards apply.
Key duties and rights
The amending Standard imposes explicit duties on auditors and sets out expectations about communications and reporting. Rights per se are not granted or altered; the text describes auditor duties and guidance for communications.
Key auditor duties created or clarified by the amendments
Include an identified statement of independence in the auditor’s report
The auditor must include a statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit and has fulfilled other ethical responsibilities. The statement must identify the relevant ethical requirements applicable within Australia (Amendments to ASA 700, amended Aus 28.1(c)(i) and Aus 50.1(e)(i)). The appended illustrative reports show the intended form of the identification (APES 110 and the Corporations Act) (Amendments to ASA 700 Appendix 1).
Disclose publicly when entity-specific independence requirements were applied
If relevant ethical requirements require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities, the auditor’s statement in the report must indicate that the auditor applied those independence requirements (Amendments to ASA 700, amended Aus 28.1(c)(ii) and Aus 50.1(e)(ii); Aus A36.1(b)). The Code (APES 110) is given as the example that has such a requirement for PIEs, and APES 110’s own requirement to disclose is noted, subject to an exception for disclosure that would reveal confidential future plans of the entity (Aus A36.1(b)).
Communicate ethical requirements applied to those charged with governance
ASA 260 is amended to require the auditor to communicate with those charged with governance the relevant ethical requirements, including independence requirements, that the auditor applies for the audit engagement, and to communicate any entity-specific independence requirements if applicable (Amendments to ASA 260, new para 17; ref Para. A29). The explanatory material clarifies that auditors must communicate the requirements they apply and notes that relevant ethical requirements may include requirements specific to audits of certain entities (Amendments to ASA 260, amended A29).
Communicate breaches and remedial actions to governance
The amended Aus A31 (renumbered from Aus A31.1) states that relevant ethical requirements or law/regulation may specify particular communications to those charged with governance where breaches of independence requirements have been identified; the Code requires written communication to those charged with governance about any breach and the action the firm has taken or proposes to take (Amendments to ASA 260, renumbered Aus A31).
Consider and, where necessary, discuss application of entity-specific requirements to other entities
Aus A36.1(a) and Aus A29.1(c) both acknowledge that auditors may be required to determine whether it is appropriate to apply entity-specific independence requirements to entities not specified in the ethical requirements. Where an auditor applies such requirements and is required to publicly disclose that fact, Aus A29.1(c) directs the auditor to consider discussing with management or those charged with governance whether the public statement risks misunderstanding the nature of the entity and whether additional disclosure is needed.
Obligations tied to the audit engagement and legal framework
The Standard states that law or regulation, Australian Auditing Standards, or the terms of an audit engagement "may also require the auditor to provide in the auditor’s report more specific information about the sources of the relevant ethical requirements" (Amendments to ASA 700, para A36 (existing paragraph amended)). Thus, auditors must consider overlapping obligations coming from law/regulation or engagement terms.
Documentation and implementation expectations
The Standard’s amendments are presented with explanatory and illustrative material, including model wording for the "Basis for Opinion" section of the auditor’s report (Amendments to ASA 700 Appendix 1). Auditors will need to document which ethical requirements were applied and, if applicable, the rationale for applying entity-specific independence requirements to entities not specified by the Code, along with any consultations with management or governance (Aus A29.1(c)).
Rights and protections
The instrument does not itself create statutory enforcement penalties or private rights of action. It is a legislative instrument made under AUASB powers (Authority Statement). Auditors are required to comply with the Standard where its application paragraphs apply (Application). The Standard also notes the APES 110 Code may provide exceptions (for example, to public disclosure where it would disclose confidential future plans), which operates as a limiting condition on the duty to disclose (Aus A36.1(b)).
In short, the Standard creates affirmative reporting and communication duties: name the ethical framework used, publicly state application of entity-specific independence requirements when required by the Code, and inform those charged with governance about the ethical requirements applied and about breaches and remedial steps where relevant.
Penalties and enforcement
The amending Standard itself sets technical and procedural requirements but does not specify sanctions or criminal penalties within its text. The instrument’s own Authority Statement and Preface provide the statutory basis for its making and its status, which define enforcement context rather than prescribe sanctions.
Statutory and normative status
The AUASB makes this Auditing Standard under section 227B of the Australian Securities and Investments Commission Act 2001 and section 336 of the Corporations Act 2001 (Authority Statement). The Preface explains the AUASB is established under s 227A of the ASIC Act and may make auditing standards for the purposes of Corporations Act legislation; these auditing standards are legislative instruments under the Legislation Act 2003 (Preface; Reasons for Issuing ASA 2025-1). That status means the Standard is part of the set of auditing standards that govern audit practice for engagements within the Corporations Act’s scope.
What the text says about enforcement
The amending Standard does not include express penalty provisions, infringement notices, or civil remedies in its text. It focuses on amending reporting and communication requirements and on explanatory guidance. It references APES 110 and law/regulation as sources of obligations and notes that those sources may independently require communications or impose consequences (Amendments to ASA 700, para A36; Amendments to ASA 260, Aus A31).
Regulatory and professional oversight , implied, not prescribed
Because the Standard applies to audits under the Corporations Act and is issued as a legislative instrument, compliance with AUASB standards is an expectation for auditors reporting under the Corporations Act. The text does not set out which regulator will enforce compliance or the specific sanctions for non-compliance. The instrument does, however, situate itself alongside APES 110 (the APESB Code), which contains independence requirements and practitioner obligations (Amendments to ASA 700 Appendix 1). Any discipline or enforcement resulting from non-compliance would therefore flow from the applicable regulatory and professional frameworks referenced (Corporations Act obligations, APES 110 professional standards, and regulatory oversight) rather than from the amending standard’s internal provisions; the Standard does not change the enforcement landscape in terms of named sanctions.
Practical consequence for auditors
Because the Standard is made under statutory powers and applies to audits "in accordance with the Corporations Act," auditors performing those audits should treat the obligations as part of the applicable auditing standards framework. Failure to follow AUASB standards may be relevant to regulatory or professional oversight processes (the Standard itself does not identify them). The document does not list fines, disqualification, or criminal sanctions; it focuses on content and communication duties.
In sum, the instrument creates binding auditing standard obligations in the AUASB framework and requires auditors to include particular statements and to communicate with governance, but it does not enumerate specific penalty mechanisms within the Standards document itself. Any enforcement or remedial action would be governed by the broader legislative, regulatory and professional frameworks referenced (for which the Standard provides content and interpretative guidance).
How it interacts with other laws
The amending Standard explicitly links itself to other legal and normative instruments and contemplates interactions. Key cross-links in the text are to the Corporations Act 2001, the ASIC Act provisions establishing the AUASB, the Legislation Act 2003 (legislative instrument status), and the APES 110 Code of Ethics.
Statutory basis and scope
The Preface explains the AUASB is established under section 227A of the Australian Securities and Investments Commission Act 2001, and under section 336 of the Corporations Act 2001 the AUASB may make Auditing Standards for the purposes of the corporations legislation; the Auditing Standards are legislative instruments under the Legislation Act 2003 (Preface; Authority Statement). The amending Standard therefore sits within the domestic regulatory architecture for corporate reporting and audit standards.
Interaction with APES 110 Code of Ethics
APES 110 is the ethical standard cited in the amendments as the "relevant ethical requirements" that the auditor should identify in the auditor’s report. The text cites APES 110 as including independence requirements applicable to PIEs and notes that APES 110 requires public disclosure where a firm applies PIE independence requirements in an audit, subject to a confidentiality exception (Amendments to ASA 700 Appendix 1; Aus A36.1(b)). The Standard therefore operationally depends on APES 110: the duty to disclose publicly in the auditor’s report flows from APES 110’s own disclosure rule, and the Standard requires the auditor to indicate where such APES 110 disclosure is applicable.
Overlap with law/regulation and audit engagement terms
The Standard expressly acknowledges that law or regulation, Australian Auditing Standards, or the terms of an audit engagement may require the auditor to provide more specific information about the sources of the relevant ethical requirements that applied to the audit (Amendments to ASA 700, para A36 (existing paragraph amended)). That wording creates an interaction: auditors must consider the intersection of AUASB Standards, APES 110 rules, statutory/regulatory obligations and contractual engagement terms, and satisfy whichever imposes the strictest or most specific disclosure obligation.
Conformity with international standards
The document states the amendments are consistent with changes made by the International Auditing and Assurance Standards Board to the equivalent International Standard on Auditing (Conformity with International Standards on Auditing). That places Australian practice in alignment with corresponding international requirements, but the amending Standard remains an Australian legislative instrument made under domestic statutory authority.
Practical coordination and potential conflicts
Because the Standard defers to APES 110 for the circumstances where a public disclosure obligation arises, auditors must keep APES 110’s requirements under review. The Standard also contemplates that auditors may apply entity-specific independence requirements (e.g. PIE-related) to entities not specified in APES 110; in such cases the auditor must consider whether public disclosure is required and whether such disclosure could cause misunderstanding (Aus A29.1(c), Aus A36.1(a)). The Standard therefore requires auditors to reconcile professional ethical requirements with legal/regulatory obligations and engagement terms. No mechanism is supplied in the Standard for resolving conflicts; auditors must interpret and apply overlapping instruments in practice, and consult management or those charged with governance where appropriate.
Documentation and engagement letter implications
The Standard’s acknowledgement that "the terms of an audit engagement may also require" specific information suggests engagement letters and audit terms may need updating to reflect the new communication and disclosure obligations (Amendments to ASA 700, para A36). Auditors and clients should therefore check engagement documentation to ensure the parties are aligned about disclosure expectations.
In sum, the amending Standard interacts directly with APES 110 and with the Corporations Act framework via the AUASB’s statutory powers, and it anticipates interaction with other laws/regulations and audit engagement terms. It does not create new statutory penalties or override APES 110; rather, it embeds APES 110 obligations into AUASB reporting and communication practice by requiring auditors to identify the ethical requirements applied and to disclose where APES 110 requires public disclosure of PIE-specific independence application.
Amendment history
This amending instrument is itself labelled ASA 2025-1 and dated 28 January 2025 (Authority Statement: Dated 28 January 2025, D Niven, Chair - AUASB). It amends two existing Auditing Standards and records prior issuance dates for those Standards.
Parent standards and prior amendments
ASA 700: The Standard being amended is ASA 700 Forming an Opinion and Reporting on a Financial Report, originally issued December 2015 and amended to March 2023 (Preface; Amendments to ASA 700). The amending instrument modifies Aus 28.1(c), Aus 50.1(e), adds a new Aus A36, renumbers a series of explanatory paragraphs (A36 to A84 renumbered A37 to A85), updates cross-references, amends illustrative auditor’s report wording in Appendix 1 (Aus Illustration 1A and 2A), and amends other explanatory paragraphs (existing paragraph A36 amended to reference law/regulation/engagement terms).
ASA 260: The Standard being amended is ASA 260 Communication With Those Charged With Governance, issued December 2015 and amended to April 2022 (Preface; Amendments to ASA 260). The amending instrument renumbers existing paragraphs 17 to 23 as 18 to 24 and inserts a new paragraph 17 under the "Auditor Independence" sub-heading; it amends cross-references, replaces A29 and its heading with amended text, deletes an explanatory paragraph A31 and renumbers Aus A31.1 as Aus A31 with amended wording to reflect communication expectations following identified breaches.
Specific amendment entries (mechanical summary)
Amendments to ASA 700:
Amended Aus 28.1(c) to require the auditor’s independence statement to identify relevant ethical requirements and to indicate when entity-specific independence requirements were applied (Amendments to ASA 700, item 1).
Amended Aus 50.1(e) similarly (Amendments to ASA 700, item 2).
Renumbered explanatory paragraphs A36-A84 to A37-A85, and inserted a new Aus A36 with Aus A36.1(a) and (b) explaining that ethical requirements may establish entity-specific independence rules and may require public disclosure when such rules were applied (Amendments to ASA 700, items 3-4).
Amended existing paragraph A36 to read that law/regulation/Australian Auditing Standards/engagement terms may require more specific information about sources of the relevant ethical requirements (Amendments to ASA 700, item 6).
Amended Appendix 1 illustrative auditor’s reports (Aus Illustration 1A and 2A) to include wording naming APES 110 and the Corporations Act as the ethical/legal frameworks and to indicate that APES 110 includes PIE-related independence requirements and requires disclosure when applied (Amendments to ASA 700 Appendix 1).
Amendments to ASA 260:
Renumbered paras 17-23 to 18-24 and inserted a new para 17 requiring communication of the ethical requirements applied to those charged with governance (Amendments to ASA 260, items 1-2).
Adjusted cross-references in renumbered paras (Amendments to ASA 260, item 3).
Amended explanatory paragraph A29 (now describing auditor independence and the need to communicate which requirements are applied), deleted a paragraph, and renumbered Aus A31.1 to Aus A31 with modified wording requiring written communication of breaches and actions taken/proposed where required by the Code (Amendments to ASA 260, items 5-9).
Operative date and retroactivity
The amending Standard states it is "operative for financial reporting periods commencing on or after 15 December 2024" (Operative Date). The instrument is dated 28 January 2025, so the operative date covers periods that began before the date of the instrument but it specifies commencement of financial reporting periods as the trigger.
Conformity with international changes
The amending Standard indicates that the changes follow those made by the International Auditing and Assurance Standards Board to the equivalent International Standard on Auditing (Conformity with International Standards on Auditing). The instrument explicitly states the amendments are consistent with ISA changes (Conformity with International Standards on Auditing).
Summary of provenance
The AUASB issues this Standard under its statutory mandate and in alignment with strategic directions from the Financial Reporting Council to develop auditing standards with a public interest focus (Preface; Reasons for Issuing ASA 2025-1). The Standard records that it is responsive to APESB changes to APES 110 and to ISA amendments.
Litigation history
The instrument supplied contains no litigation history. It does not cite any judicial decisions, nor does it reference prior court rulings or disputes interpreting ASA 700, ASA 260, APES 110, or the AUASB’s powers. The text contains only statutory references, standard-setting provenance, amendment details and illustrative wording. The explanatory footnotes referenced in the draft (e.g. numbered footnotes in the Amending Standard) are not reproduced in the supplied text, and no case law is cited.
Therefore, based on the source text provided:
There are no cases named.
There is no recorded litigation about ASA 2025-1 within the document.
The Standard presents itself as an administrative amendment made by the AUASB under its legislative mandate; it does not recount judicial interpretation or prior legal disputes concerning the specific changes.
Practitioners should therefore assume the amendments have not, as of the document text, been the subject of reported litigation and that any legal contestation or interpretive disputes would need to be sought outside this instrument in court records or regulatory determinations.
Gotchas
The amending Standard contains several points that require careful practical attention; these are features that can create implementation risk, process friction or user confusion if not handled deliberately.
Operative date vs instrument date
The Standard is dated 28 January 2025 but is operative for financial reporting periods commencing on or after 15 December 2024 (Operative Date). Auditors need to map reporting periods to the operative date: for some entities the financial reporting period may have commenced before the instrument was issued but the Standard will nonetheless apply if the period commenced on or after 15 December 2024. This raises practical questions about audit planning and engagement letters for periods crossing the operative threshold.
The disclosure duty is contingent on APES 110 (and is not absolute)
The requirement to indicate in the auditor’s report that entity-specific independence requirements were applied is conditioned on whether the "relevant ethical requirements require the auditor to publicly disclose" that application (Aus 28.1(c)(ii), Aus 50.1(e)(ii), Aus A36.1(b)). The text explicitly points to APES 110 as an ethical requirement that may impose such a public disclosure duty for PIEs and notes an exception where disclosure would reveal confidential future plans of the entity (Aus A36.1(b)). Practitioners must therefore read APES 110 carefully to see when the disclosure obligation arises and whether an exception applies.
Auditor discretion to apply entity-specific independence requirements to other entities
Aus A36.1(a) and Aus A29.1(c) indicate auditors may be required to determine whether it is appropriate to apply independence requirements that are specific to certain entities to entities not specified in the ethical requirements. If an auditor elects or deems it appropriate to apply PIE-specific independence rules to a non-PIE, and if APES 110 requires public disclosure when such rules are applied, the auditor may be required to disclose publicly that the PIE-standard independence rules were applied. Aus A29.1(c) points to the risk that such a public disclosure could lead to misunderstanding of the nature of the entity; the auditor is directed to discuss with management/ governance whether additional disclosure is needed. The risk here is a mismatch between the entity’s stated status and the auditor’s public statement that PIE-level independence rules were used, which could confuse users.
Engagement terms and law/regulation may require more specific information
The amended ASA 700 explanatory paragraph (existing paragraph A36 amended) notes that law/regulation, Australian Auditing Standards or the terms of the audit engagement may require the auditor to provide more specific information about sources of the relevant ethical requirements. This implies auditors must check contractual engagement terms and applicable regulation for any added disclosure duties or constraints. If engagement letters do not anticipate these new reporting requirements, there may be negotiation or amendment needed.
Boilerplate wording in illustrations is narrow in scope
The amended illustrative wording in Appendix 1 shows a particular phrasing that names the Corporations Act and APES 110 as the relevant frameworks and states the Code’s relevance "to our audits of the financial report of public interest entities in Australia." If auditors need to make disclosures for other entity types or in different jurisdictions, the illustrative wording may need adaptation. The Standard does not provide model wording for all permutations; firms will need to ensure wording correctly reflects the precise ethical/legal basis applicable within Australia for each audit.
Communication burden to those charged with governance
ASA 260’s inserted paragraph 17 requires explicit communication to those charged with governance of "the relevant ethical requirements, including those related to independence, that the auditor applies for the audit engagement" (Amendments to ASA 260, para 17). Auditors must decide when and how this communication occurs, document it, and ensure governance bodies understand whether entity-specific independence rules have been applied. This may require additional meetings, formal letters, or committee briefings.
Renumbering and cross-reference updates could create drafting errors
The amending Standard renumbers many explanatory paragraphs (A36 to A84 renumbered to A37 to A85, paras 17-23 to 18-24 in ASA 260, etc.). Practitioners and compliance systems that rely on paragraph numbering must update references to avoid mis-citation. Firms’ audit manuals, checklists, and templates using paragraph numbers must be revised accordingly.
The Standard does not specify enforcement mechanisms
The instrument is silent on sanctions; auditors must infer enforcement from the AUASB’s statutory role and from relevant professional disciplinary or regulatory mechanisms outside the document. The absence of a specified enforcement pathway in the text may create uncertainty about the consequences of non-compliance.
Confidentiality exception in APES 110
The illustration of APES 110’s exception,where disclosure would reveal confidential future plans,adds an element of judgement. Determining what constitutes confidential future plans and whether disclosure would reveal them may require legal or client consultation, increasing engagement costs and potential delay in finalising the auditor’s report wording.
No new definitions introduced but reliance on existing glossary
The amending Standard says it does not introduce new definitions and that meanings of terms are set out in each Auditing Standard and the AUASB Glossary (Definitions). Practitioners must therefore cross-check the AUASB Glossary and the original ASA texts for terminological clarity rather than looking for new definitions in ASA 2025-1.
Being alert to these "gotchas" will help firms and governance bodies minimise missteps in reporting and communications as they implement the amended requirements.
How to comply
This section sets out a practical compliance checklist and process steps closely tied to the text of ASA 2025-1. Each step references the relevant provision in the amending Standard as the source of the obligation.
Determine applicability of the amending Standard to the engagement
Confirm the audit engagement falls within the scope: audits of financial reports for a financial year or half-year under the Corporations Act, audits of a financial report or complete set of financial statements for other purposes, or as appropriate to other historical financial information (Application, paras 1-2). If the financial reporting period commenced on or after 15 December 2024, the Standard is operative (Operative Date).
Identify the relevant ethical requirements to be disclosed
Review the ethical framework applicable to the audit and identify which "relevant ethical requirements applicable within Australia" govern the engagement (Amendments to ASA 700, Aus 28.1(c)(i) and Aus 50.1(e)(i)). The Standard’s illustrative text points to APES 110 and the Corporations Act as likely inclusions (Amendments to ASA 700 Appendix 1). Document the legal and professional sources reviewed and the conclusion that they constitute the relevant ethical requirements.
Decide whether entity-specific independence requirements were applied
Determine whether APES 110 or other relevant ethical requirements establish independence requirements specific to audits of certain entities (Aus A36.1(a)). If the auditor applied such entity-specific independence requirements (for example, PIE-specific independence rules), note that APES 110 may require public disclosure that those requirements were applied (Aus A36.1(b)). Record the decision logic and the specific provisions of APES 110 relied upon.
Check for exceptions to public disclosure
If APES 110 requires disclosure, assess whether the APES 110 exception applies,i.e. whether making the disclosure would reveal confidential future plans of the entity (Aus A36.1(b)). Document the assessment and, if relying on the exception, the factual grounds for concluding disclosure would reveal confidential future plans. Consider obtaining client consent or legal advice where appropriate.
Prepare auditor’s report wording
If disclosure is required or appropriate, include the statement in the auditor’s report that (a) identifies the relevant ethical requirements applicable within Australia and (b) indicates the auditor is independent in accordance with independence requirements applicable to audits of those entities where applicable (Amendments to ASA 700, Aus 28.1(c)(i)-(ii) and Aus 50.1(e)(i)-(ii)). Use the Appendix 1 illustrative wording as a drafting starting point but adapt it to the specific audit circumstances (Amendments to ASA 700 Appendix 1). Ensure the wording accurately reflects whether PIE-specific independence requirements were applied.
Update engagement letter and audit plan
Given the Standard’s acknowledgement that engagement terms may require specific disclosures (Amendments to ASA 700, existing paragraph A36 amended), revise the engagement letter to set out how the auditor will communicate the relevant ethical requirements and any public disclosure that may occur. Update the audit plan to reflect any additional procedures or documentation needed to support disclosure and governance communications.
Communicate with those charged with governance
Implement ASA 260’s new paragraph 17 requirement: communicate to those charged with governance the relevant ethical requirements, including independence matters, that the auditor applies to the engagement (Amendments to ASA 260, inserted para 17). This communication should occur at an appropriate point in the audit cycle (for example, in the opening meeting with the audit committee or in a formal governance letter) and be documented. If entity-specific independence requirements were applied or considered for application, make that explicit and document any discussions.
Address breaches and remedial actions
Where breaches of independence requirements have been identified, follow the communication obligations noted in Aus A31: relevant ethical requirements or law/regulation may specify communications to those charged with governance; the Code (APES 110) requires the auditor to communicate in writing about any breach and the actions taken or proposed (Amendments to ASA 260, renumbered Aus A31). Prepare written communications describing the breach, the assessment of threats, safeguards applied, and actions taken or proposed.
Document judgement to apply entity-specific independence rules to non-specified entities
If you decide to apply independence requirements specific to certain entities to audits of entities not specified in APES 110, record the rationale, professional judgement and consultation (Aus A36.1(a); Aus A29.1(c)). Aus A29.1(c) recommends discussing with management or those charged with governance whether a public statement that PIE independence requirements were applied may create a risk of misunderstanding, and whether additional disclosure is warranted.
Update templates and internal compliance systems
Revise standard report templates (Basis for Opinion wording), audit committee communication templates, and checklists to reflect the new paragraph numbering and wording changes (Amendments to ASA 700 and ASA 260). Ensure cross-reference updates given the renumbering (A36 → A37 etc.) and update internal training and audit manuals.
Train audit teams and governance bodies
Provide training to audit partners, engagement leaders, and audit committee contacts on the new disclosure and communication duties, the APES 110 trigger conditions, and the rare confidentiality exception to disclosure (Aus A36.1(b)). Make clear who within the firm is authorised to approve public wording and governance communications.
Monitor APES 110 and other legal/regulatory updates
Because the duty to disclose is contingent on APES 110, keep monitoring APESB updates to APES 110 and any legislative/regulatory changes that could affect the scope of "relevant ethical requirements" or the list of entities to which entity-specific independence requirements apply (Objective; Conformity with International Standards on Auditing). Document version control for the APES 110 text used to make disclosure decisions.
Keep records for assurance and review
Maintain working papers showing the consideration of independence requirements, the justification for disclosure (or for relying on the confidentiality exception), communications with management/governance, and the final wording used in the auditor’s report (Amendments to ASA 700; ASA 260 para 17 and Aus A31).
Checklist summary tied to paragraph cites
Is the audit within ASA 2025-1’s scope? (Application, paras 1-2)
Have you identified the "relevant ethical requirements applicable within Australia"? (Aus 28.1(c)(i), Aus 50.1(e)(i))
Did you apply any independence requirements specific to particular entities? (Aus A36.1(a))
Does APES 110 require public disclosure of that application? If so, does the confidentiality exception apply? (Aus A36.1(b))
Have you updated the auditor’s report wording per the amended Aus 28.1(c)/Aus 50.1(e) and Appendix 1 illustrations? (Amendments to ASA 700 Appendix 1)
Have you communicated the relevant ethical requirements applied to those charged with governance and documented the communication? (ASA 260, para 17)
If breaches exist, have you provided written communication about the breach and the actions taken or proposed? (Renumbered Aus A31)
Have you updated engagement letters and internal templates to reflect the new disclosure and communication duties and the paragraph renumbering? (Amendments to Auditing Standards paras 1-2; Amendments to ASA 700 existing paragraph A36)
Following the above steps, with documentary support referencing the specific paragraphs cited above, will align practice with the mechanical requirements of ASA 2025-1 as presented in the supplied text.
Requests and enquiries concerning reproduction and rights for commercial purposes should be addressed to the Director - National, Auditing and Assurance Standards Board, PO Box 204, Collins Street West, Melbourne, Victoria 8007 or sent to enquiries@auasb.gov.au. Otherwise, no part of this Auditing Standard may be reproduced, stored or transmitted in any form or by any means without the prior written permission of the AUASB except as permitted by law.
ISSN 1833-4393
CONTENTS
PREFACE
AUTHORITY STATEMENT
CONFORMITY WITH INTERNATIONAL STANDARDS ON AUDITING
Amendments to Auditing Standards............................................7-8
Amendments to ASA 700.....................................................9-16
Amendments to ASA 260....................................................17-23
preface
Reasons for Issuing ASA 2025-1
The AUASB issues Auditing Standard ASA 2025-1 Amendments to Australian Auditing Standards pursuant to the requirements of the legislative provisions and the Strategic Direction explained below.
The AUASB is a non-corporate Commonwealth entity of the Australian Government established under section 227A of the Australian Securities and Investments Commission Act 2001. Under section 336 of the Corporations Act 2001, the AUASB may make Auditing Standards for the purposes of the corporations legislation. These Auditing Standards are legislative instruments under the Legislation Act 2003.
Under the Strategic Direction given to the AUASB by the Financial Reporting Council, the AUASB is required, inter alia, to develop auditing standards that have a clear public interest focus and are of the highest quality.
Main Features
This Auditing Standard amends the requirements and application and other explanatory material and appendices of the following Auditing Standards:
ASA 700 Forming an Opinion and Reporting on a Financial Report (Issued December 2015 and amended to March 2023)
ASA 260 Communication With Those Charged With Governance (Issued December 2015 and amended to March 2021)
ASA 2025-1 amends:
ASA 700 in connection with disclosure concerning the application of auditor independence requirements in the Code in audit reports of public interest entities and certain other entities; and
ASA 260 to require the auditor to communicate to those charged with governance of an audited entity on the application of the auditor independence requirements.
AUTHORITY STATEMENT
The Auditing and Assurance Standards Board (AUASB) makes this Auditing Standard ASA 2025-1 Amendments to Australian Auditing Standards pursuant to section 227B of the Australian Securities and Investments Commission Act 2001 and section 336 of the Corporations Act 2001.
Dated: 28 January 2025 D Niven
Chair - AUASB
Conformity with International Standards on Auditing
This Auditing Standard makes amendments to other auditing standards that are consistent with changes made by the International Auditing and Assurance Standards Board to the equivalent International Standard on Auditing.
Reasons for Issuing ASA 2025-1 Reasons for Issuing ASA 2025-1
Reasons for Issuing ASA 2025-1
The AUASB issues Auditing Standard ASA 2025-1 Amendments to Australian Auditing Standards pursuant to the requirements of the legislative provisions and the Strategic Direction explained below.
The AUASB is a non-corporate Commonwealth entity of the Australian Government established under section 227A of the Australian Securities and Investments Commission Act 2001. Under section 336 of the Corporations Act 2001, the AUASB may make Auditing Standards for the purposes of the corporations legislation. These Auditing Standards are legislative instruments under the Legislation Act 2003.
Under the Strategic Direction given to the AUASB by the Financial Reporting Council, the AUASB is required, inter alia, to develop auditing standards that have a clear public interest focus and are of the highest quality.
Main Features Main Features
Main Features
This Auditing Standard amends the requirements and application and other explanatory material and appendices of the following Auditing Standards:
ASA 700 Forming an Opinion and Reporting on a Financial Report (Issued December 2015 and amended to March 2023)
ASA 260 Communication With Those Charged With Governance (Issued December 2015 and amended to March 2021)
ASA 2025-1 amends:
ASA 700 in connection with disclosure concerning the application of auditor independence requirements in the Code in audit reports of public interest entities and certain other entities; and
ASA 260 to require the auditor to communicate to those charged with governance of an audited entity on the application of the auditor independence requirements.
AUTHORITY STATEMENT
The Auditing and Assurance Standards Board (AUASB) makes this Auditing Standard ASA 2025-1 Amendments to Australian Auditing Standards pursuant to section 227B of the Australian Securities and Investments Commission Act 2001 and section 336 of the Corporations Act 2001.
Dated: 28 January 2025 D Niven
Chair - AUASB
Conformity with International Standards on Auditing
This Auditing Standard makes amendments to other auditing standards that are consistent with changes made by the International Auditing and Assurance Standards Board to the equivalent International Standard on Auditing.
AUTHORITY STATEMENT AUTHORITY STATEMENT
AUTHORITY STATEMENT
The Auditing and Assurance Standards Board (AUASB) makes this Auditing Standard ASA 2025-1 Amendments to Australian Auditing Standards pursuant to section 227B of the Australian Securities and Investments Commission Act 2001 and section 336 of the Corporations Act 2001.
Conformity with International Standards Conformity with International Standards on Auditing
Conformity with International Standards on Auditing
This Auditing Standard makes amendments to other auditing standards that are consistent with changes made by the International Auditing and Assurance Standards Board to the equivalent International Standard on Auditing.
Auditing Standard ASA 2025-1 Auditing Standard ASA 2025-1
Auditing Standard ASA 2025-1
Amendments to Australian Auditing Standards
Application
This Auditing Standard applies to:
an audit of a financial report for a financial year, or an audit of a financial report for a half-year, in accordance with the Corporations Act 2001; and
an audit of a financial report, or a complete set of financial statements, for any other purpose.
This Auditing Standard also applies, as appropriate, to an audit of other historical financial information.
Operative Date
This Auditing Standard is operative for financial reporting periods commencing on or after 15 December 2024.
Introduction
Scope of this Auditing Standard
This Auditing Standard amends Australian Auditing Standards ASA 700 Forming an Opinion and Reporting on Financial Statements and ASA 260 Communication with Those Charged with Governance in relation to disclosing publicly the application of the independence requirements for certain entities, including Public Interest Entities (PIEs) and communicating on those matters to those charged with governance.
Objective
The objective of this Auditing Standard is to amend the following Auditing Standards in connection with disclosure concerning auditor independence in audit reports following changes made by the Accounting Professional & Ethical Standards Board (APESB) to APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) and communication to those charged with governance:
ASA 700 Forming an Opinion and Reporting on a Financial Report (Issued 1 December 2015 and amended to 31 March 2023); and
ASA 260 Communication With Those Charged With Governance (Issued 1 December 2015 and amended to 27 April 2022).
Definitions
For the purposes of this Auditing Standard, the meanings of terms are set out in each Auditing Standard and in the AUASB Glossary. This Auditing Standard does not introduce new definitions.
Amendments to Auditing Standards
Where relevant, this Standard uses underlining, striking out and other typographical material to identify the amendments to a Standard, in order to make the amendments more understandable. However, the amendments made by this Standard do not include that underlining, striking out or other typographical material. Amended paragraphs are shown with deleted text struck through and new text underlined. Ellipses (…) are used to help provide the context within which amendments are made and also to indicate text that is not amended.
Where this amending standard inserts or deletes a paragraph or footnote, as a result of that insertion or deletion relevant paragraph numbers, cross-references and footnotes are updated.
Amendments to ASA 700
Existing subparagraph Aus 28.1(c) is amended to read as follows:
Includes a statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit, and has fulfilled the auditor’s other ethical responsibilities in accordance with these requirements.
(i) The statement shall identify the relevant ethical requirements applicable within Australia; and (Ref: Para. Aus A34.1–A389)
(ii) If the relevant ethical requirements require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities, the statement shall indicate that the auditor is independent of the entity in accordance with the independence requirements applicable to the audits of those entities; and (Ref: Para. A36)
Existing subparagraph Aus 50.1(e) is amended to read as follows:
A statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit, and has fulfilled the auditor’s other ethical responsibilities requirements in accordance with these requirements.
(i) The statement shall identify the relevant ethical requirements applicable within Australia.
(ii) If the relevant ethical requirements require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities, the statement shall indicate that the auditor is independent of the entity in accordance with the independence requirements applicable to the audits of those entities.
Each of the existing paragraphs A36 to A84 are renumbered as paragraphs A37 to A85 respectively. All cross-references to those paragraphs are updated accordingly.
The following paragraph A36 is inserted following existing paragraph A35:
Relevant ethical requirements may:
(a) [Deleted by the AUASB. Refer to Aus A36.1(a).]
Aus A36.1(a) Establish independence requirements that are specific to audits of financial reports of certain entities specified in the relevant ethical requirements, such as the independence requirements for audits of financial reports of public interest entities in the APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code). Relevant ethical requirements may also require the auditor to determine whether it is appropriate to apply such independence requirements to audits of financial reports of entities other than those entities specified in the relevant ethical requirements.
(b) Require the auditor to publicly disclose when the auditor applied independence requirements specific to audits of financial reports of certain entities. For example, the Code requires that when a firm has applied the independence requirements for public interest entities in performing an audit of the financial reports of an entity, the firm publicly disclose that fact, unless making such disclosure would result in disclosing confidential future plans of the entity.[29]
ASA 260 sets out requirements and guidance about the auditor’s communication with those charged with governance, which incl
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