Document ID: chunk:federal_register_of_legislation:F2023L01535:body:0:p12
Version: federal_register_of_legislation:F2023L01535
Segment Type: other
Provision Reference: 
Character Range: 30562–33666

EFLIC, the auditor of the local operation must have direct access to the Head Office audit function.

Internal audit
68.         An APRA-regulated institution must have an independent and adequately resourced internal audit function for the institution. If an APRA-regulated institution does not believe it is necessary to have a dedicated internal audit function, it must apply to APRA to seek an exemption from this requirement, setting out reasons why it believes it should be exempt. APRA may approve alternative arrangements for an institution where APRA is satisfied that they will achieve the same objectives.
69.         The objectives of the internal audit function must include evaluation of the adequacy and effectiveness of the financial and risk management framework of the institution.[12] To fulfil its functions, the internal auditor must, at all times, have unfettered access to the institution's business lines and support functions.

Auditor independence[13]
70.         The Corporations Act 2001 (Corporations Act) contains a number of requirements in relation to auditor independence. The auditor independence requirements in this Prudential Standard are substantially consistent with those requirements, and are intended to help ensure the independence of an auditor engaged to perform work of a prudential nature in relation to the Banking Act, Insurance Act, Life Insurance Act (collectively, the 'Prudential Acts'), prudential standards and reporting standards.[14]
71.         The Board of the APRA-regulated institution, senior officer outside Australia or the Compliance Committee, as relevant, must, to the extent practical, undertake steps to satisfy itself that the auditor, who undertakes work for the APRA-regulated institution in relation to the Prudential Acts, prudential standards or reporting standards, is independent of the institution,[15] and that there is no conflict of interest situation that could compromise, or be seen to compromise, the independence of the auditor.
72.         As part of the process of ascertaining the independence of the auditor, an APRA-regulated institution must obtain a declaration from the auditor to the effect that:
       (a)          the auditor is independent, both in appearance and in fact;
       (b)          the auditor has no conflict of interest situation; and
       (c)          there is nothing to the auditor's knowledge (either in relation to the individual auditor or any audit firm or audit company of which the auditor is a member or director) that could compromise that independence.
73.         For the purposes of this Prudential Standard, a conflict of interest situation exists in relation to an APRA-regulated institution at a particular time, if because of circumstances that exist at that time:
       (a)          the auditor is not capable of exercising objective and impartial judgement in relation to the conduct of the work that is undertaken for the institution in relation to the Prudential Acts, prudential standards or reporting standards; or
       (b)          a reasonable person, with full