APES 350: Duties on Due Diligence Committees

Identify the Public Document and the Member’s Role

Identify the public document and your due diligence committee role before accepting the appointment. The 2025 APES 350 standard distinguishes committee participation from reporting on a specific issue.

A public document includes disclosure documents and product disclosure statements. The definition also covers specified documents for schemes of arrangement, takeovers and compulsory acquisitions. A private acquisition review does not automatically have the same scope.

Committee Roles Compared

Role	Participation	Reporting position
Due diligence committee member	Participates in committee decisions	Signs collective committee reports and documents, and usually prepares a separate due diligence sign-off
Due diligence committee observer	Attends meetings without becoming a committee member	Does not sign collective reports; can undertake agreed enquiries and have separate reporting duties
Reporting person	Addresses an identified issue or area of enquiry	Reports to the client and committee on the agreed work; can also be a committee member or observer

An observer who only attends meetings has different responsibilities from an observer engaged to perform procedures and report. Put that distinction in writing.

APES 350 also says to apply the standard as far as practicable to committee services outside a public-document engagement. Identify the actual instruction before borrowing a public-document reporting form. Broader M&A due diligence has its own acquisition questions and transaction decisions.

Align the Engagement With the Planning Memorandum

Compare your engagement document with the due diligence planning memorandum before the committee relies on your proposed contribution. The engagement document records your agreed terms. The memorandum sets out the process and the participants’ individual and collective responsibilities.

Check that both documents describe the same role, information and procedures. Record whether you will issue a due diligence sign-off or, as an observer, a new circumstances statement. Identify any report intended for inclusion in the public document and the assurance, if any, it will provide.

If the memorandum adds acceptable responsibilities, advise the client and agree an amended engagement document or addendum. If the added work is unacceptable or conflicts with APES 350, advise the client and committee. Take reasonable steps to have the memorandum corrected. If conflicting or prohibited responsibilities remain, decline the committee engagement.

A timetable cannot supply missing expertise. Where a proposed sign-off needs expertise outside your competence, obtain suitable expert assistance or decline the engagement. Assess the expert’s competence and objectivity, and the adequacy of the work. Disclose the required expert details where you rely on that advice in your report.

Keep descriptions of your role in the public document within the agreed scope. Resolve any wording that implies you approved information beyond your work.

Perform and Document the Assigned Work

Connect each assigned assertion to the procedure performed and the evidence supporting the result. APES 350 requires working papers that record the work and identify sources of important information.

For an assertion about customer receipts, the file could connect the proposed disclosure to the sales ledger, underlying agreements and bank receipts. Record enquiries of management separately from corroborating records. Explain discrepancies and retain the reviewer’s resolution, instead of replacing an open issue with an unexplained tick.

Working papers let another professional follow how the evidence supports the reported result. Identify the document version and section to which each procedure relates. A later draft can alter a statement even when the underlying amount stays the same.

FinTrace helps accountants reconstruct bank activity through a searchable ledger and a findings report with source PDF filenames and pages. Those references give the accountant direct access to the statement evidence for the assigned enquiry. A matched receipt establishes the recorded money movement. Its commercial purpose requires the relevant agreement and accounting evidence.

A member engaged to sign off financial information must not prepare that information or its extracts, summaries or analysis elsewhere in the public document. Reviewing drafts to identify matters affecting the sign-off is permitted. Keep separate prospective-information reporting under APES 345 within its own engagement requirements.

Assess Materiality and Unresolved Information

Apply materiality to the assigned reporting task and escalate unresolved matters to the client or committee. If you agree to give materiality guidance, APES 350 requires compliance with applicable auditing and assurance standards and a materiality letter.

The member’s guidance addresses quantitative matters. The client, after committee consideration, decides materiality for a proposed disclosure using quantitative and qualitative considerations. An amount below a numerical threshold can still raise a disclosure issue because of its nature.

Consider a hypothetical unexplained receipt from a director-controlled entity that management has included in revenue. The bank record confirms the receipt, while the relationship raises a separate classification question.

Obtain the agreement, the ledger entry and evidence of what the payment funded. Ask management to explain why it is revenue and test that explanation against the records. A loan agreement, for example, would change the issue from revenue recognition to financing and related-party disclosure.

Keep the item open while its purpose remains unresolved. Record its amount, possible effect on the financial information and the committee’s response. Escalate concerns encountered during your agreed work even when they concern the public document more broadly. That communication does not authorise a separate opinion on the document as a whole.

Choose the Appropriate Sign-Off or Statement

Choose the report from the role and completed procedures, then apply its specific conditions. APES 350’s appendix forms require tailoring to the engagement.

Reporting Forms Compared

Form	When it applies	What the member must establish
Due diligence sign-off	A committee member, or an observer whose work supports the sign-off, reports on specified information	Procedures are sufficient and appropriate, scope limitations are considered and material matters arising have been addressed
Materiality letter	The member is engaged to provide materiality guidance	Quantitative guidance follows applicable standards, with disclosure decisions remaining with the client after committee consideration
New circumstances statement	An observer has already issued a due diligence sign-off and is requested to provide the statement	Later procedures address whether that earlier sign-off needs amendment, without extending its subject matter or scope

A committee member must not issue the observer’s new circumstances statement. The committee member can instead sign the committee’s collective new circumstances sign-off when the other committee members approve and sign it concurrently.

A due diligence sign-off identifies the information examined and work performed. It states the basis of the conclusions, including materiality and reliance on others. Its conclusions address whether anything has come to the member’s attention suggesting the specified information is misleading or deceptive, including by omission. They also address the reasonableness of the relevant enquiries.

Limited enquiry alone, or procedures from a past engagement alone, cannot support those sign-off conclusions. For an unfinished public document, assess the missing information and any necessary changes to the sign-off. Identify the particular draft and relevant assumptions.

Check the proposed wording against your actual role. Collective reporting on the whole public document follows the committee-report conditions. An accountant’s separate sign-off cannot promise a universal statutory defence.

Respond to New Circumstances Before Final Reliance

Assess later facts against the earlier work and the document version on which the committee intends to rely. Where new information changes an unresolved receipt’s classification, identify the affected disclosure and the conclusions that relied on it.

Preserve the original report alongside the new evidence. Record who receives the issue, what additional procedures you perform and why the resulting statement changes or remains appropriate. For an observer’s new circumstances statement, keep the work within the original sign-off’s scope.

Before consenting to being named or having a report included, obtain the final draft and assess the form and context. A correct standalone report can become misleading through its placement or surrounding description.

APES 350 also requires communication of material new circumstances discovered after issue, according to the planning memorandum or relevant legislation. Establish the applicable reporting period from those terms. Give the client or committee the evidence and affected passages so it can decide the required response.