APES 205 Conformity with Accounting Standards ('APES 205') sets out mandatory requirements and guidance for members. Members must comply with the relevant financial reporting framework applicable to their relevant jurisdiction when they prepare, present, audit, review or compile general purpose financial statements, or special purpose financial statements.
Scope and application
APES 205 which has been revised by Accounting Professional & Ethical Standards Board Limited (APESB) is effective from 1 January 2023 and supersedes APES 205 issued in December 2019. The standard requires members in Australia to adhere to its mandatory requirements, whilst members outside of Australia are required to comply with the financial reporting framework applicable to the relevant jurisdiction unless they are preparing financial statements in accordance with the Australian financial reporting framework.
Fundamental responsibilities of members
APES 205 requires members to comply with Part 1 of the Code and with their public interest obligations when they prepare, present, audit, review or compile financial statements. Members must ensure they meet their professional obligations established in Section 113 Professional Competence and Due Care of the Code. The Standard stipulates that members must have the requisite professional knowledge and skill, or if they do not have the necessary expertise, they must engage a suitably qualified external person.
Responsibilities of members in respect of the Reporting Entity concept
APES 205 refers members to Statement of Accounting Concepts 1 Definition of the Reporting Entity and the Framework for the Preparation and Presentation of Financial Statements issued by Australian Accounting Standards Board. This provides guidance on circumstances in which an entity will be considered a reporting entity. Members who are responsible for preparing and/or presenting financial statements of reporting entities are required to prepare general purpose financial statements.
Responsibilities of members in respect of general purpose financial statements
APES 205 requires that members take all reasonable steps to comply with Australian accounting standards when they prepare, present, audit, review or compile general purpose financial statements which purport to comply with the Australian Financial Reporting Framework.
Where members are unable to ensure that general purpose financial statements are prepared in accordance with Australian accounting standards, they have an obligation to take reasonable steps to ensure that appropriate disclosures are made in the financial statements. Where legislation, ministerial directive or other government authority requires a departure from the Australian accounting standards members must disclose that fact as the reason for departure in the general purpose financial statements.
Responsibilities of members in respect of special purpose financial statements
Where special purpose financial statements are prepared, members have a professional obligation to ensure the following matters are disclosed:
- that the financial statements are special purpose financial statements
- the purpose for which the special purpose financial statements are prepared
- the material accounting policies adopted in the preparation and presentation of the special purpose financial statements.
Members who are involved in, or are responsible for, the preparation, presentation, audit, review, or compilation of special purpose financial statements must take all reasonable steps to ensure that the special purpose financial statements comply with the applicable Australian accounting standards.
Where members are unable to ensure proper disclosure of departures from Australian accounting standards, APES 205 states that members should discuss the matter with an appropriate level of management and document the results of these discussions.
Members in public practice
APES 205 requires members to take reasonable steps to ensure clients have complied with Australian accounting standards when performing an audit or review engagement or a compilation engagement of general purpose or special purpose financial statements.
Where members in public practice have been engaged to provide audit, review or compilation services and are unable to ensure that clients have complied with the applicable financial reporting framework, the members have a professional obligation to consider relevant Australian auditing standards applicable to audit or review engagements or professional standards applicable to compilation engagements.
Refer to APES 205 for information concerning definitions.
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