ASIC Class Order [CO 12/1687]

Administered by Department of the Treasury

Legislation au F2012L02497 Not in force Legislative Instrument

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ASIC CLASS ORDER [CO 12/1687]

EXPLANATORY STATEMENT

Prepared by the Australian Securities and Investments Commission

Superannuation Industry (Supervision) Act 1993

The Australian Securities and Investments Commission (ASIC) makes ASIC Class Order [CO 12/1687] under subsection 128Q(1) of the Superannuation Industry (Supervision) Act 1993 (the Act).

Subsection 128Q(1) provides that ASIC may, by legislative instrument, determine competency standards to be complied with by all approved SMSF auditors.

1. Background

On 16 December 2010, the then Assistant Treasurer and Minister for Financial Services and Superannuation (Minister) announced the Stronger Super reforms in response to the review into the governance, efficiency, structure and operation of Australia’s superannuation system, the Super System Review.

The Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Act 2012 implemented, via changes to the Act, the Stronger Super reforms relating to auditors of self-managed superannuation funds (SMSFs). The reforms included a registration regime for auditors of SMSFs, with ASIC as the registration body. Under the Act, auditors of SMSFs must be registered with ASIC from 1 July 2013 to be able to sign-off on SMSF auditor’s reports. A registered auditor of SMSFs is referred to in the Act as an ‘approved SMSF auditor’.

ASIC is also responsible under the Act for setting competency standards. The Australian Taxation Office has powers under the Act to monitor approved SMSF auditor’s compliance with relevant standards and to refer matters of non-compliance to ASIC. ASIC has powers under the Act to take administrative action in relation to approved SMSF auditors who have not met their on-going obligations in accordance with the Act.

Approved SMSF auditors must, in accordance with subparagraph 128F(c)(i) of the Act, comply with the competency standards set by ASIC under subsection 128Q(1) of the Act.

2. Purpose of the class order

Class Order [CO 12/1687] sets out the competency standards determined by ASIC to be complied with by all approved SMSF auditors under subparagraph 128F(c)(i) of the Act.

Class Order [CO 12/1687] specifies competencies that an approved SMSF auditor is required to have in all of the following areas:

(a) client acceptance and retention;

(b) engagement planning;

(d) substantive testing;

(e) forming an opinion;

(f) documentation.

The competency standards are based on Competency requirements for auditors of self-managed superannuation funds dated February 2008, prepared by the Joint Accounting Bodies (i.e. CPA Australia, The Institute of Chartered Accountants in Australia and the Institute of Public Accountants).

3. Operation of the class order

Class Order [CO 12/1687] sets out the competencies, in terms of tasks and knowledge requirements that approved SMSF auditors are required to have. The knowledge requirements include an understanding of certain legislative and other requirements as well as matters specified in relation to the tasks.

The tasks set out in the class order are such that an auditor will generally need to perform them when deciding to undertake or undertaking an audit and assurance engagement in relation to an SMSF. Whether a particular task needs to be performed, including a task not set out in the class order, is a matter that the auditor will need to determine having regard to the circumstances.

The tasks set out in the class order are not intended to be a substitute for an audit or assurance program required by the relevant auditing and assurance standards, nor for the need to understand and apply the requirements of the relevant auditing and assurance standards, ethical standards or the Act.

4. Statement of Compatibility with Human Rights

This statement is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

This legislative instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of Human Rights (Parliamentary Scrutiny) Act 2011because it does not engage any of the applicable rights or freedoms.

5. Consultation

To provide input on the design and implementation of the Stronger Super reforms, the Government undertook extensive consultation with industry, employer and consumer groups. The Government announced its decisions on the key design aspects of the Stronger Super reforms in the Minister’s Media Release No. 131 of 21 September 2011.

ASIC consulted publically on a draft of the class order via a consultation paper released on 14 November 2012.

Overview

The ASIC Class Order [CO 12/1687] was enacted in 2012 by the Australian Securities and Investments Commission (ASIC) under the Superannuation Industry (Supervision) Act 1993. This legislation was introduced to address gaps in the oversight and regulation of auditors of self-managed superannuation funds (SMSFs) identified during the Super System Review. The primary aim of the Stronger Super reforms, which include this class order, is to enhance the governance, efficiency, structure and operation of Australia’s superannuation system by establishing a registration regime for SMSF auditors and setting competency standards for their practice. By doing so, the reforms seek to ensure that auditors of SMSFs are suitably qualified and competent to perform their roles, thereby protecting the interests of superannuation fund members and maintaining the integrity of the superannuation system.

Scope and Application

The ASIC Class Order [CO 12/1687] applies to all approved SMSF auditors who must comply with the competency standards set forth in this legislative instrument. These auditors are required to be registered with the Australian Securities and Investments Commission (ASIC) under the Superannuation Industry (Supervision) Act 1993. The Act mandates that from 1 July 2013, any auditor signing off on SMSF auditor's reports must be an approved SMSF auditor registered with ASIC. The competency standards are designed to ensure that auditors possess the necessary skills and knowledge to perform audits of self-managed superannuation funds effectively. The class order specifies competencies in areas such as client acceptance and retention, engagement planning, controls, evaluation and testing, substantive testing, forming an opinion, and documentation. These standards are based on the competency requirements for auditors of self-managed superannuation funds prepared by the Joint Accounting Bodies. The class order extends to the entire Commonwealth of Australia, applying nationally to all SMSF auditors. It does not contain any stated exclusions or exemptions and is intended to complement rather than replace the audit or assurance programs and the requirements of relevant auditing and assurance standards, ethical standards, and the Act.

Key Provisions

The main operative sections of the ASIC Class Order [CO 12/1687], as outlined in the explanatory statement, detail the competency standards required for all approved SMSF auditors under the Superannuation Industry (Supervision) Act 1993. Section 128Q(1) of the Act allows ASIC to determine these competency standards, which must be met by auditors to be approved. The competencies are specified in areas such as client acceptance and retention (128F(c)(i)(a)), engagement planning (128F(c)(i)(b)), controls, evaluation and testing (128F(c)(i)(c)), substantive testing (128F(c)(i)(d)), forming an opinion (128F(c)(i)(e)), and documentation (128F(c)(i)(f)). These standards are based on the competency requirements for auditors of self-managed superannuation funds dated February 2008, prepared by the Joint Accounting Bodies. The obligations imposed by the Act on the parties it governs include the requirement for SMSF auditors to be registered with ASIC from 1 July 2013 to sign-off on SMSF auditor’s reports. Approved SMSF auditors must adhere to the competency standards set by ASIC, which include understanding specific legislative and other requirements, as well as the tasks outlined in the class order. They must also ensure their audit practices are in accordance with relevant auditing and assurance standards, ethical standards, and the Act. Additionally, the Australian Taxation Office has the authority to monitor auditors' compliance and refer any non-compliance matters to ASIC. The Act outlines various consequences for breaches of the competency standards. Approved SMSF auditors who fail to meet these standards may face administrative actions taken by ASIC. While specific penalties are not detailed in the explanatory statement, ASIC’s powers under the Act allow for enforcement actions that can include fines, suspension, or revocation of registration. The Act does not specify maximum penalties for breaches but leaves it to ASIC to determine appropriate administrative actions in line with their regulatory powers.

Area of Law: Superannuation Law
Instrument: Class Order
Concepts: Competency Standards; Regulatory Standards; Consultation Requirements

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.

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