Updated: Feb 6, 2020
Mis-use of Auditor Numbers
Over 600 tax practitioners have either deliberately or mistakenly mis-used an SMSF auditor number, with the ATO detecting over a thousand instances of potential fraud. “Some practitioners have fraudulently charged clients for audits that didn’t occur and some have even prepared false audit reports with forged auditor signatures,” a recent ATO report said. The SMSF audit community has long been concerned at gaps in the system which mean there is no efficient reconciliation between actual audits undertaken by an auditor and SMSF tax returns using the same auditor number.
In effect, mis-use of a SMSF auditor number (SAN) amounts to the auditor's identity / authority being misrepresented by the tax practitioner, with both the ATO and Trustees lured into believing an SMSF is compliant and protected when in fact no valid audit has been undertaken. Surely in this digital era, the profession of SMSF auditing should not fall prey to catfish-like false portrayal of identity. The ATO’s recent campaign on intentional and inadvertent mis-use of auditor numbers has revealed 1445 instances of potential SAN misuse. These figures come from 420 auditors who reported mis-use after an ATO mail-out to 5,446 SMSF auditors, meaning that nearly 8% identified misuse of their auditor numbers. We might safely assume that not every auditor included in the mail-out invested the time required to cross-check the ATO list against their own audit lists, so we suspect this may only be the tip of the iceberg.
Need for a better system
Although the current manual reconciliation process is inefficient and needs improvement, it is better than the previous situation where an auditor remained unaware of how and when their SAN had been used. Surely in a post-Royal Commission environment, greater care, accuracy and honesty is required across the industry. Systematically, the potential for auditor numbers to be used without the authority of the auditor must be stopped. Quality, independent audits are a cornerstone of a sustainable SMSF industry.
Respect for audits
Importantly, compliance needs to be seen - not as a burden / cost centre - but rather in playing a valuable role in protecting retirement savings. At SaulSMSF, we want to work with people who hold their clients' best interests at heart and who respect the value-add of the audit process. Contact us for more information.
28 views0 comments