AFSL Audits

A Guide to Appointment, Removal, and Resignation

Overview to financial reporting by AFS licensees

AFS Licensees whether individuals, partnerships, trusts or corporations must prepare a true and fair view of the financial statements under Chapter 7 of the Corporations Act 2001 in respect of each financial year. The financial year for individuals and corporations are as follows:

  • For corporate license holders: 31 October
  • For a corporate license holder that is a disclosing entity: 30 September
  • For all other license holders: 31 August

For companies incorporated under the Corporations Act 2001, it is a requirement to lodge annual financial statements and an Auditor’s Report under Chapter 2M of the Corporations Act which must be lodged with ASIC in the prescribed forms (FS70 for the financial statements, and FS71 for the Audit Report). Financial statements will need to be prepared to at least a General Purpose Financial Report level (Tier 2) in accordance with AASB 1060. This means that they will need to comply with all requirements of the Corporations Act 2001, as well as the accounting standards, which includes (but is not limited to):

  • Statement of financial performance (Profit and Loss Statement)
  • Statement of financial position (Balance Sheet)
  • Statement of changes in equity
  • Statement of cash flows
  • Director’s report
  • Notes to the financial statements
  • Audit report

So, how do you engage a registered company auditor to provide the audit report? This article outlines the key steps involved in engaging, resigning and removing an AFSL registered company auditor referencing the relevant Australian Securities and Investments Commission (ASIC) regulations and forms needed in the process.

If you’re interested in learning more about our AFSL Audit Services please reach out for a confidential quote. Simply submit your details and one of our friendly team will be in touch as soon as possible.

    Engaging an AFSL Auditor

    1. Appointment: Within one month from after your license takes effect, you must appoint an auditor to audit your financial statements. After appointing your auditor, you must lodge a written notice to ASIC within 14 days specifying the name of the person or firm appointed and the date of their appointment.

      You can either lodge form FS06 online via the portal or submit the paper version of the form (signed and dated by an authorised person) and post to Australian Securities and Investments Commission PO Box 4000 Gippsland Mail Centre VIC 3841.

      Note: Where the appointment is a replacement for an outgoing auditor, the date of appointment is the date ASIC granted their consent.

    1. Agreement: Once you’ve selected an auditor, the AFSL audit engagement will be formalised with an engagement letter during the same process. This letter outlines the scope of the audit, both parties’ responsibilities, agreed fees, reporting timelines for the audit results and communication protocols between you and your registered auditor.
    1. ASIC registered auditor: ASIC maintains a list of registered auditors in their database and you can conduct a check prior to appointment. Our firm, Auditors Australia, is an ASIC registered auditor.
    Removal of an AFSL Auditor
    1. You will need to apply to ASIC. You must apply for ASIC’s consent before you can remove the person or firm as your auditor. This application must be lodged by you and should be lodged at least three weeks before the date the removal is to take effect. You can either lodge online or use form FS07 (signed dated by a an authorised person)  and post to Australian Securities and Investments Commission PO Box 4000 Gippsland Mail Centre VIC 3841. You will need to include the following in form FS07:
      • a specific reason why the financial services licensee wants to remove the auditor;
      • details of the status of the audit (i.e. partially completed; not yet started); and
      • confirmation from the proposed replacement auditor stating that they are prepared to accept the appointment, subject to our consent to the removal being granted.
      You are not required under the Act to advise the auditor in writing that the application is being made. However, ASIC expect you to do this and will not grant consent to a removal unless the auditor has been put on notice, or reasonable attempts have been made to notify the auditor of the application. Once the position of auditor becomes vacant, a new auditor must be appointed within 14 days. You are then required to lodge a notice of appointment (as previously explained above in engaging an AFSL Auditor) within 14 days of this appointment.
    1. Obtain written confirmation from your replacement auditor. You will need to obtain written confirmation from the proposed replacement auditor stating that the auditor is prepared to accept the appointment, subject to the consent to the removal being granted by ASIC. This confirmation is an attachment to form FS07.
    1. Signed copy of directors’ or member’s resolution (For proprietary companies only). Obtain and attach to the Form FS07 a signed copy of a directors’ or members’ resolution appointing a replacement auditor subject to ASIC’s consent to the resignation being granted.
    1. Form FS06: You still need to submit FS06 to appoint your new auditor after the auditor is removed after submitting the FS07 as above.
    1. Form FS09 (For proprietary companies only). Only use this form in the circumstance that your auditor has died or is prohibited from being an auditor. You will then post the form to Australian Securities and Investments Commission PO Box 4000 Gippsland Mail Centre VIC 3841. No consent from ASIC is required.
    1. Removal of an AFSL Auditor (public companies only). Unlike resignation of an auditor for public companies as outline above, consent from ASIC to remove an auditor is not required. You will only need to notify ASIC of any change in auditor using the Form 315 Notification of resignation, removal or cessation of auditor. You will then post the form to Australian Securities and Investments Commission PO Box 4000 Gippsland Mail Centre VIC 3841. The removal of an auditor of a company requires the approval of company members at a general meeting. The removal process is set out in s329 of the Corporations Act.
    AFSL Auditor wishes to resign
    1. Your current auditor needs to apply to ASIC. If your current auditor intends to resign, the auditor will submit a written application to ASIC and obtain consent for the resignation. The current auditor will need to include three things in the application:
      1. Form FS08;
      2. Written confirmation from the replacement auditor; and
      3. A signed copy of directors’ or members resolution (for proprietary companies only).
      The current auditor will lodge an application using form FS08  at least three weeks before the date the resignation will take effect. The application will be posted to Australian Securities and Investments Commission PO Box 4000 Gippsland Mail Centre VIC 3841. The auditor will need to include the following in form FS08:
      • specific reason why the auditor wishes to resign;
      • details of the status of the audit (i.e. partially completed; not yet started); and
      • the date when the resignation is to take effect.
      The current auditor will notify you once the application is made and the result of the application.

    2. Obtain written confirmation from your replacement auditor. You will need to obtain written confirmation from the proposed replacement auditor stating that the auditor is prepared to accept the appointment, subject to the consent to the resignation being granted by ASIC. Forward the confirmation letter to the current auditor as this will be included as an attachment to form FS08.

    3. Signed copy of directors’ or member’s resolution (For proprietary companies only). Obtain and forward to the current auditor a signed copy of a directors’ or members’ resolution appointing a replacement auditor subject to ASIC’s consent to the resignation being granted.

    4. Form FS06: You still need to submit FS06 to appoint your new auditor after the auditor is removed after submitting the FS07 as above.

    5. Accomplish Form 315 (For proprietary companies only). In addition, to the above procedures, if you are required to have an auditor by reason other than you being an AFSL, you will need to complete Form 315  within 14 days after receiving the notice of resignation from the auditor. You will then post the form to Australian Securities and Investments Commission PO Box 4000 Gippsland Mail Centre VIC 3841. No consent from ASIC is required.

    6. Resignation of an AFSL Auditor (public companies only). Your current auditor will need to submit an application to ASIC and obtain consent for the resignation via the ASIC Regulatory Portal . The application is subject to the requirements in Regulatory Guide 26 specifically the following:
      • All the information in RG 26.29 and RG 26.31–RG 26.32 if resignation is at an AGM
      • All the information in RG 26.29– RG 26.32 if resignation is other than at an AGM
    7. In addition, you must notify ASIC of any change in auditor using the Form 315 Notification of resignation, removal or cessation of auditor . You will then post the form to Australian Securities and Investments Commission PO Box 4000 Gippsland Mail Centre VIC 3841.