APES 310 Client Monies

APES 310 took effect in December 2010 and was revised several times, the latest was in November 2019. The revised standard, which is effective for engagements commencing on or after 1 January 2020, requires members in public practice in Australia to adhere to its mandatory requirements when they deal with client monies or act as an auditor of client monies. For members in public practice outside of Australia the provisions of APES 310 must be followed as long as local laws and regulations are not contravened. The standard does not apply where a member in public practice is acting as a trustee or under a power of attorney as in these circumstances the member is not acting in a client relationship.

The Standard is divided into two parts:

• Part A: professional obligations of a member in public practice who deals with client monies
• Part B: professional obligations of an auditor of client monies.

Monies include:

• cash
• foreign currency
• any negotiable instrument
• any security, the title to which is transferable by delivery (for example, bills of exchange and promissory notes), including delivery by electronic funds transfer.

Client monies means any monies (in whatever form) coming into the control of a member in public practice or any of the member’s personnel which are the property of a client and includes monies to which the member or the member’s personnel have no present entitlement.

Obligations include:

• general principles to be followed
• opening of trust accounts
• dealing with client monies in relation to holding, receiving and disbursement of client monies
• documentation.

APES 310 requires members in public practice who deal with client monies or act as an auditor of client monies to comply with APES 110 Code of Ethics for Professional Accountants (the Code) in respect of:

• Section 100 – Complying with the Code
• Subsection 113 – Professional Competence and Due Care
• Subsection 114 – Confidentiality
• Section 310 – Conflicts of Interest.

Some of the general principles in relation to dealing with client monies require a member to:

• comply with Section 350 – Custody of Client Assets of the Code
• only deal with client monies through a client bank account or a trust account and only in accordance with the client’s agreement and/or instructions
• be accountable for all client monies and keep client monies separate from the member’s all other monies
• implement appropriate internal controls and procedures in respect of the operation of trust accounts and client bank accounts
• not obtain any benefit from dealing with client monies without prior written authority from the client
• only charge professional fees in respect of dealing with client monies in accordance with Section 330 – Fees and Other Types of Remuneration of the Code
• not receive or pay into or disburse out of a trust account or a client bank account, if the member believes, on reasonable grounds, that they were obtained from, or are to be used for, illegal activities or that dealing with the monies is otherwise unlawful
• not be involved in any money laundering transactions or in the utilisation of the proceeds of crime or terrorist financing.
• comply with Section 360 Responding to Non-Compliance with Laws and Regulations (NOCLAR) of the Code where encounters or becomes aware of instances of non-compliance or suspected non-compliance with laws and regulations.

See APESB guidance on:

• Example bank letter to open a trust account 
• Professional accountants and trust accounts information sheet 

The obligations of APES 310 extend to more than to members operating trust accounts. The Standard applies where a member, or any of the member’s employees, can authorise a transaction of client monies which include:

• holding, receiving or disbursing of client monies
• being authorised to transact client monies
• any monies coming into the control of the member to which the member has no present entitlement.

APES 310 extends the annual audit requirements to Members who hold, receive or disburse client monies to ensure strengthened safeguards for clients.

Members who opened trust accounts or obtained authority to transact in client monies after 1 July 2011 can choose the applicable year-end date if it is within 12 months of the month-end following the opening of the trust account or obtaining the authority to transact. Once the year-end date is chosen, it cannot be changed without approval from CPA Australia.

Members who opened a trust account accounts or obtained authority to transact in client monies before 1 July 2011 must comply with the audit requirements of APES 310 within three months of the applicable year-end date, which is 31 March each year.

A member in public practice must ensure that the member’s compliance with the requirements of the Standard is audited annually within three months of the applicable year-end date and must appoint another member in public practice as auditor of client monies to perform the audit.

Members who stop dealing with client monies must ensure that compliance with APES 310 is audited within three months of ceasing.

A member in public practice who acts as an auditor of client monies is required to:

• perform the applicable assurance engagement and prepare the auditor’s report in accordance with auditing and assurance standards
• comply with Part B – Independence For Assurance Engagements Other Than Audit and Review Engagements of the Code
• report any deficiency of client monies to the member’s professional body within five business days upon becoming aware of the deficiency
• report to the member’s professional body within 10 business days of becoming aware of any material failure by a member, uncorrected error reflected in a statement issued by a financial institution or circumstances where client monies have not been transacted or maintained in accordance with this standard
• retain relevant working papers for a period of at least seven years
• consider notifying the auditee's professional body when resigning from the position or being removed from their role of auditor of client monies.

A copy of a modified auditor's report must be forwarded by the auditor to the General Manager Professional Conduct at CPA Australia within 15 business days of the completion of the assurance (audit) engagement.

Although unmodified reports are not required to be lodged, they must be maintained and may be reviewed as part of the Best Practice Program.

• definitions
• public interest
• professional competence and due care
• confidentiality
• opening a trust account
• dealing with client monies
• disbursement of client monies
• documentation
• conformity with international pronouncements