As we move towards 1 July 2021, and the new SMSF audit independence requirements, this has implications for practices seeking to outsource their SMSF audits. 

The question is, can APES 305 help accounting practices navigate the process of outsourcing their audits? Galstyan believes so. “APES 305 is an additional issue for accounting firms to focus on, but together with APES GN 30 Outsourced Services, it offers further clarification as well as a checklist to follow.”

Using APES 305 to shape due diligence

As Galstyan sees it, APES 305 in tandem with GN 30, acts as a guide for accounting practices to refine their due diligence process in selecting an independent SMSF auditor.

“APES 305 is designed to support accounting practices in navigating the process of communicating outsourcing of SMSF audits,” says Galstyan. “When a firm is going to engage an outsourced provider, it needs to ensure an agreement is in place – and everything is stipulated in that agreement, including such matters as evaluating whether to renew, renegotiate or terminate an outsourcing agreement.” 

According to Galstyan, APES 305 makes it critical for accounting practices to look for an independent SMSF audit service with the skills, experience and capacity to handle their needs. More so because the relationship will be spelled out to SMSF trustees.    

She adds, “Along with stating the services the independent provider will perform, APES 305 also calls for disclosure of the geographic location where services will be performed in line with materiality considerations. 

“We are seeing some SMSF accountants and auditors use overseas contractors based overseas, and under APES 305, this level of geographic outsourcing needs to be disclosed in a client engagement letter. I think a lot of SMSF trustees may be surprised to learn what is going on in the background.” A key point of the Evolv difference is that the firm is 100% owned by Australians. 

Measuring performance

APES 305 also looks at how accountants will review the performance of outsourced service providers. 

“It’s one thing to measure your own firm’s performance,” says Galstyan. “It’s a very different matter to measure the work of others over which you have no control. So, accounting practices need to have in place quantitative and qualitative measures to meet this requirement.”

Other issues to be addressed under APES 305 include whether an accounting firm is able to access the work papers of an outsourced SMSF audit provider, and setting out guidelines around who will maintain primary contact with SMSF trustees.  

Helping firms make a smooth transition

As Galstyan sees it, APES 305 may appear to be another layer of compliance to address, but it goes very much hand-in-hand with APES 110. “Compliance with APES 305 will help accounting practices implement APES 110. It’s all about separation and segregation of roles. 

“Accountants who need to outsource their SMSF audits also need to conduct due diligence and have an outsourcing agreement with an independent SMSF auditor. The whole point of APES 305 – and GN 30, is that they help to set out what needs to be communicated.”  

Time is running out

Prompt action is required among accounting practices that need to outsource their SMSF audits. APES 305 comes into force on 1 July 2021 – in time to coincide with SMSF audit independence rules. 

For more information on Evolv’s SMSF audit capabilities, contact David Goldsmith at Evolv on This email address is being protected from spambots. You need JavaScript enabled to view it. or call 1300 886 536 or visit evolvsuper.com.au/evolv-black/.