AASB 1054 Australian Additional Disclosures requires the financial statements to disclose audit fees. One of our other offices does tax work for my client. The offices of our firm share the same name but we are separate legal entities. Does the financial statements of my client need to disclose the fees paid for tax work to our other office?
AASB 1054 includes the following requirement:
An entity shall disclose fees to each auditor or reviewer, including any network firm, separately for:
(a) the audit or review of the financial statements; and
(b) all other services performed during the reporting period.
For paragraph 10(b) above, an entity shall describe the nature of other services.
There is specific reference to a network firm in the AASB 1054 requirement which is defined in APES 320 Quality Control for Firms as:
Network Firm or Network Assurance Practice means a Firm, practice or entity that belongs to a Network. Network means a larger structure:
(i) that is aimed at cooperation; and
(ii) that is clearly aimed at profit or cost-sharing or shares common ownership, control or management, common quality control policies and procedures, common business strategy, the use of a common brand name, or a significant part of professional resources.
If your other office shares the same name as you and you are operating as one firm through a shared website / increased penetration into the market etc so that the ‘man in the street’ would think you were the same firm, then the fees earned from the other offices would need to be disclosed within the audit fee disclosure note in the financial statements.
For further clarification of this requirement, contact Carmen Ridley, Principal AFRS (email@example.com).