Fill - Free fillable Form 7: APES 305 Terms of Engagement (National Asthma Council Australia) PDF form

APES 305 Terms of Engagement

[Supersedes APES

305 Terms of Engagement issued in October 2015]

REVISED: August 2019

dealing for the purpose of study, research, criticism and review as permitted by the Copyright Act 1968, no part of these

materials may be reproduced, modified, or reused or redistributed for any commercial purpose, or distributed to a third party

for any such purpose, without the prior written permission of APESB.

Any permitted reproduction, including fair dealing, must acknowledge APESB as the source of any such material

reproduced and any reproduction made of the material must include a copy of this original notice.

APES 305 Terms of Engagement

Contents

Section

ope and application ................................................................................................................. 1

Definitions .................................................................................................................................... 2

Terms of Engagement for Professional Services ........................................................................ 3

General contents of an Engagement Document ......................................................................... 4

Recurring Engagements .............................................................................................................. 5

Professional Standards Schemes ................................................................................................ 6

Conformity with International Pronouncements

Appendix

1: Summary of revisions to the previous APES 305 (Issued in October 2015)

APES 305 Terms of Engagement

1. Scope and application

1.1 The objectives of APES 305 Terms of Engagement are to specify a Member in

Public Practice’s professional and ethical obligations in respect of:

• documentation and communication of the Terms of Engagement to a Client;

• matters to be included in an Engagement Document;

• circumstances in which an Engagement Document should be reissued in

respect of a recurring Engagement; and

• limitation of liability schemes.

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

1.10

Accounting Professional & Ethical Standards Board Limited (APESB) has revised

professional standard APES 305 Terms of Engagement (the Standard), which is

effective for Engagements commencing on or after 1 January 2020 and supersedes

APES 305 Terms of Engagement issued in October 2015. Earlier adoption of this

Standard is permitted.

APES 305 sets the standards in respect of Terms of Engagement for Members in

Public Practice in the provision of quality and ethical Professional Services to

Clients. The mandatory requirements of this Standard are in bold-type, preceded or

followed by

discussion or explanations in normal type. APES 305 should be read in

conjunction with other professional duties of Members, and any legal obligations

that may apply. In some instances there are specific standards applicable to

Members in Public Practice issued by other standard setting bodies or specific

requirements of statutes in respect of Terms of Engagement, for example ASA 210

Agreeing the Terms of Audit Engagements issued by the Auditing and Assurance

Standards Board which governs audit Engagements. Compliance with these other

standards or statutes should result in compliance with APES 305.

Members in Public Practice in Australia shall follow the mandatory

requirements of APES 305 when they provide Professional Services to

Clients.

Members in Public Practice practising outside of Australia shall follow the

provisions of APES 305 to the extent to which they are not prevented from so

doing by specific requirements of local laws and/or regulations.

Members in Public Practice shall comply with other applicable Professional

Standards and be familiar with relevant guidance notes when providing

Professional Services. All Members shall comply with the fundamental

principles outlined in the Code.

The Standard is not intended to detract from any responsibilities which may be

imposed by law or regulation.

All references to Professional Standards, guidance notes and legislation are

references to those provisions as amended from time to time.

In applying the requirements outlined in APES 305, Members in Public Practice

should be guided not merely by the words but also by the spirit of this

Standard and

the Code.

In this Standard, unless otherwise specified, words in the singular include the plural

and vice versa, words of one gender include another gender, and words referring to

persons include corporations or organisations, whether incorporated or not.

APES 305 Terms of Engagement

2. Definitions

Defined terms are shown in the body of the Standard in title case.

For the purpose of this Standard:

Client means an individual, firm, entity or organisation to whom or to which Professional

Activities are provided by a Member in Public Practice in respect of Engagements of either a

recurring or demand nature.

Code means APES 110 Code of Ethics for Professional Accountants (including

Independence Standards).

Engagement means an agreement, whether written or otherwise, between a Member in

Public Practice and a Client relating to the provision of Professional Services by a Member in

Public Practice. However, consultations with a prospective Client prior to such agreement are

not part of an Engagement.

Engagement Document means the document (i.e. letter, agreement or any other appropriate

means) in which the Terms of Engagement are specified in Writing.

Firm means:

(a) A

sole practitioner, partnership, corporation or other entity of professional accountants;

(b) An entity that controls such parties, through ownership, management or other means;

(d) An Auditor-General’s office or department.

Member means a member of a Professional Body that has adopted this Standard as

applicable to their membership, as defined by that Professional Body.

Member in Public Practice means a Member, irrespective of functional classification (for

example, audit, tax or consulting) in a Firm that provides Professional Services. This term is

also used to refer to a Firm of Members in Public Practice and means a practice entity and a

participant in that practice entity as defined by the applicable Professional Body.

Professional Activity means an activity requiring accountancy or related skills undertaken by

a Member, including accounting, auditing, tax, management consulting, and financial

management.

Professional Bodies means Chartered Accountants Australia and New Zealand, CPA

Australia and the Institute of Public Accountants.

Professional Services means Professional Activities performed for Clients.

Professional Standards means all standards issued by Accounting Professional & Ethical

Standards Board Limited and all professional and ethical requirements of the applicable

Professional Body.

Terms of Engagement means the terms and conditions that are agreed between the Client

and the Member in Public Practice for the Engagement.

Writing means a mode of representing or reproducing words in a visible form and includes

words in an electronic format capable of being converted to printed text.

APES 305 Terms of Engagement

3. Terms of Engagement for Professional Services

3.1 A Member in Public Practice shall document and communicate to the Client

the Terms of Engagement.

3.2 The practice of documenting and communicating the Terms of Engagement should

ensure that there is a clear understanding between the Client and the Member in

Public Practice regarding the Terms of Engagement.

3.3 It is in the interests of both the Client and Member in Public Practice that the

Member documents and communicates the Terms of Engagement, preferably

before the Engagement commences, to avoid misunderstandings with respect to the

Engagement.

3.4 A Member in Public Practice shall document the Terms of Engagement in the

Engagement Document.

3.5 The Engagement Document need not be in the form of a letter or agreement. For

example, a standard format handout, brochure, leaflet or electronic communication

is also acceptable.

3.6 The objectives and scope of some Engagements are established by law.

Documentation of the Terms of Engagement cannot reduce obligations imposed by

law. Where the Engagement is undertaken under statute, a Member in Public

Practice should refer to the applicable provisions of the law in the Engagement

Document.

4. General contents of an Engagement Document

4.1 The following is a guide to matters that should, for most Engagements, be

considered for inclusion in an Engagement Document. Engagement Documents will

vary according to the nature of the Engagement and the terms of appointment of the

Member in Public Practice. The matters referred to below in paragraphs 4.2 to 4.10

should therefore be varied to meet the individual requirements and circumstances of

each Engagement.

4.2 Purpose: The Engagement Document should explain that its purpose is to set out

and confirm the understanding of the Member in Public Practice of the Terms of

Engagement.

4.3 Objectives of the Engagement: A brief summary of the objectives of the

Engagement including reference to the fact that:

(a) procedures to be performed will be limited exclusively to those related to the

Engagement;

(b) neither an audit nor a review will be conducted and, accordingly, no

assurance will be expressed (if applicable); and

irregularities, including fraud, other illegal acts and errors that may occur.

4.4 Scope of the Engagement: Pertinent details of such matters as:

(a) time periods covered by the Engagement;

(b) period of appointment and time schedules;

or auditing and assurance standards that may be relevant to the Engagement;

APES 305 Terms of Engagement

(d) any limitations on the conduct of the Engagement including scope limitations

and limitations arising from legal or professional and ethical requirements;

(e) Client operations or procedures to be included in the Engagement; and

(f) details of information to be provided by the Client.

4.5

The Member in Public Practice should consider the implications of a recurring

Engagement when documenting the details noted above.

Engagement output: Details of reports or other anticipated outputs, including:

(a) expected timing;

(b) the intended use and distribution of reports; and

of the Member in Public Practice (for example, appropriate limitation of

liability clauses for Members in Public Practice participating in Professional

Standards Legislation schemes) with respect to the Client or any other user

of the results of the Engagement.

4.6 Relative responsibilities: Responsibilities agreed upon, detailing those

acknowledged to be the responsibility of:

(a) the Member in Public Practice, including reference to relevant confidentiality

requirements and th

e impact of them on the quality review program of the

relevant Professional Body to which the Member in Public Practice belongs,

and the Member’s obligations on responding to actual or suspected non-

compliance with laws and regulations (NOCLAR);

(b) the Client, noting the fact that the Client is responsible for the completeness

and accuracy of information supplied to the Member in Public Practice; and

4.7

4.8

4.9

4.10

Involvement of other Members in Public Practice: Where the work of another

Member in Public Practice is to be used on some aspects of the Engagement, the

details of this involvement should be documented in the Engagement Document.

Fees and billing arrangements: Reference to the basis and calculation of fees (for

example, time based billing, fixed price contracts, referral fees and commissions,

contingent fee arrangements or other similar agreement). Details of agreed upon

billing schedules should also be included.

Ownership of documents: The Engagement Document should make clear who owns

any documents produced as a result of the Engagement or provided by the Client

for such a purpose including electronic data. If a Member in Public Practice has a

policy of seeking to exercise a right of lien over such documents in the event of a

dispute with the Client, this policy should be disclosed in the Engagement

Document communicated to the Client, including the process for dealing with

disputes over the lien.

Confirmation by the Client: Request for a response from the Client confirming its

understanding of the Terms of Engagement as outlined in the Engagement

Document. It is preferable for this confirmation of Client acceptance of the Terms of

Engagement to be obtained in Writing.

APES 305 Terms of Engagement

5. Recurring Engagements

5.1 In certain circumstances a Member in Public Practice will have to determine

whether an Engagement is a recurring Engagement. A recurring Engagement

generally exhibits the following features:

• unchanged Terms of Engagement under which the Professional Services are

provided;

• the same or similar Professional Service provided by the Member in each

period;

• defined or identifiable commencement and completion dates each time the

Engagement is performed; and

• performance of the Engagement is on a regular periodic basis as agreed with

the Client, for example annually.

5.2 When determi

ning the need to reissue or amend an Engagement Document for a

recurring Engagement, a Member in Public Practice should consider the following

factors:

(a) any indication that the Client misunderstands the objectives and scope of the

Engagement;

(b) any significant changes in the Engagement;

Terms of Engagement;

(d) a recent change of Client management or ownership;

(e) a significant change in the nature or size of the Client's business;

(f) any significant changes to Professional Standards or applicable accounting or

auditing and assurance standards; and

(g) any changes to legal or regulatory requirements.

6.1

6.2

Professional Standards Schemes

A Member in Public Practice who is participating in a Professional Standards

Scheme that limits liability shall comply with the relevant Professional

Standards Legislation and applicable regulations of the Professional Body.

A Member in Public Practice who is a participant in a scheme under

Professional Standards Legislation shall disclose to the Client that the

Member’s liability may be limited under the scheme in accordance with the

disclosure requirements in applicable laws and/or regulations.

Conformity with International Pronouncements

The International Ethics Standards Boards for Accountants (IESBA) has not issued a

pronouncement equivalent to APES 305.

APES 305 Terms of Engagement

Appendix 1

Summary of revisions to the previous APES 305 (Issued in October

2015)

APES 305 Terms of Engagement was originally issued in December 2007 and revised in

June 2009, March 2013 and October 2015. APES 305 has been revised by APESB in August

2019. A summary of the revisions is given in the table below.

Table of revisions*

Paragraph affected

How affected

1.2

Amended

1.3

Amended

1.5

Amended

1.6

Amended

2 – Introduction

Added

2 – Definition of Code

Amended

2 – Definition of Engagement Document

Amended

2 – Definition of Firm

Amended

2 – Definition of Member in Public Practice

Amended

2 – Definition of Professional Activity

Amended

2 – Definition of Professional Standards

Amended

2 – Definition of Writing

Added

3.3

Amended

3.5

Amended

3.6

Amended

4.4

Amended

4.5

Amended

4.6

Amended

4.8

Amended

4.9

Amended

4.10

Amended

6 – Heading

Amended

6.1

Amended

6.2

Amended

* Refer Technical Update 2019/5

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