Bank Audit Certificates – why are they required?

Why is the auditor asking for a bank audit certificate?  Why am I getting charged so much by my bank?

As part of the audit process, the Auditor is required to verify the existence of assets shown in the financial statements of the organisation/company or SMSF and ensure that the entity or fund has legal title to the asset.  In addition to verifications for property or plant and equipment, verification is also required for cash held at a financial institution.


Fair enough but why not just accept a bank statement?

On occasion, we receive questions regarding the amount charged by a bank for bank audit certificates (BAC) and why this is necessary, given that bank statements are provided during the audit process.


Part of the audit requirements are that the Auditor audits the financial statements as well as ensuring compliance with relevant legislation and in accordance with Australian Auditing Standards.  In particular, ASA 500 Audit Evidence requires that sufficient evidence is obtained by the auditor in order to form an audit opinion.


Where the amount held in cash is significant compared to other assets, then the risk of material misstatement is higher and thus this evidence requirement becomes crucial.  Standards indicate that evidence obtained from an independent source/third party provides greater assurance than documentation obtained directly from the client.


A BAC details all accounts held by the trustee or entity including details of the account holder, signatories, any borrowings, security deposits, debit balances during the year.  As a result, it provides information not just on the transactions recorded in bank statements but also enables confirmation of assets (and/or liabilities) that exist and are recorded on the financial statements.


So if you’re going to rely on this, why do you need to see bank statements from the whole year?

While the BAC and end of year bank records provide evidence of holdings and the cash assets as at year end, review of the bank statements will show patterns throughout the year and enable verification of the status of the bank account, i.e. that it hasn’t gone into overdraft or remained overdrawn for an extended period.


So as you can see, information needs to be gleaned from a number of sources to enable the auditor to make an informed statement regarding compliance and to form an audit opinion.



Should you have any concerns/queries, our staff can assist with education and advising the types of documentation that can be collated throughout the year to ensure that all relevant information is available at the time of the audit.  Our focus is on providing a high quality service to our clients and if we can value add by facilitating greater understanding of the relevant principles and strategies to be best prepared for an audit, then we’d love to assist.  Please contact us to discuss any queries on 1300 CBAUDIT.


If you are not a current client and would like more information on our services, please contact Matt Williams through [email protected].