If you’re a public accountant, safeguarding client monies is one of your key professional responsibilities. In 2018 the Accounting Professional and Ethical Standards Board restructured APES 310 to make the rules about how accountants handle client monies clearer. However because public accountants provide clients with a broad range of services there can still be uncertainty around the activities that fall within or outside APES 310’s mandatory obligations.

In summary, if you are in public practice in Australia, APES 310 applies when you or your staff:

1. handle client monies through a trust account that you have opened at a financial institution
2. have access to a client’s bank account to pay client invoices via accounting software or are an authorised signatory on client bank accounts
3. audit client monies.

Put simply, you need to keep your clients’ monies safe and separate from your own funds. The following examples show when APES 310 applies and when it doesn’t.

When APES 310 applies

• You receive client tax refunds from the Australian Taxation Office. This is money that doesn’t belong to you but has come under your control. It’s important that you don’t deduct fees your client owes you from your client’s tax refund unless your client has provided you with authority to do this.
• Your client engages you as their outsourced chief financial officer. If you or your staff have access to your client’s accounting software and pay creditors from your client’s bank account, you have control over your client’s funds. This scenario includes bookkeepers who pay invoices and wages.
• You or your staff share dual signatory access with a client to a client’s bank account. Sometimes your client approves transactions. Sometimes you do. Or both of you may be required to sign. Either way, you have control over client monies in conjunction with your client. In this example, control means sole or joint authority to transact.
• You or your staff are an authorised cheque signatory for a client. When your client is away or unavailable, you draw cheques and pay expenses on their behalf.

When APES 310 doesn’t apply

• Your client pays your professional fees in advance. If your terms of engagement are that pre-payments are not refundable, it’s your money.
• You authorise transactions in your role as a director of the client. In this instance, you’re not acting in a client relationship. Instead, you have officeholder obligations under the law.
• You authorise payments for your client in your role as trustee or under a power of attorney. Again, you’re not acting in a client relationship. You have separate obligations under the trust deed or power of attorney appointment document.
• You prepare banking transactions for approval by your client. In this case, you have no authority to transact.

If your accounting services don’t fit these examples or you’re uncertain if they come under APES 310 Client monies, talk to the CA ANZ Professional Standards and Ethics Advisory Team.

Key APES 310 rules at a glance

Take time to review APES 310 and consider how it applies to your practice. Here are some key points to note:

• You must appoint a client monies auditor and advise CA ANZ if the auditor changes. This is to discourage opinion shopping.
• Once chosen, the year-end date can’t be changed without approval from CA ANZ.
• Your compliance with APES 310 must be audited each year within three months of year-end.
• The audit must be conducted by a member of CA ANZ, CPA Australia or the Institute of Public Accountants who holds a Certificate of Public Practice. They don’t need to be a Registered Company Auditor (RCA).
• Where you’re only a co-signatory on a client bank account (and don’t have a trust account), APES 310 allows your auditor to perform a Limited Assurance Engagement.
• If the audit report contains a modified opinion, it must be lodged with CA ANZ within 15 days of completion of the audit.

APES 310 terms defined

Client monies
Money that comes under your (or your staff’s) control but is the property of your client. It’s money that you’re not entitled to.

Control
When you (or your staff) can authorise transactions of client monies solely or jointly with your client.

Client relationship
You’re engaged by a client to provide professional activities that require accountancy or related skills. These include accounting, auditing, tax, management consulting and financial management.

Wrapping up, CA ANZ expects members to take their compliance with APES 310 seriously. When you have access to your clients’ money, your clients and the community, are placing trust in you. Abusing that trust can have significant implications for your clients’ financial position. It can put you at risk of allegations of mishandling or misappropriating client property and do great harm to the reputation of our profession.