Choosing the best auditor for your firm
Evaluating different SMSF auditors is not as simple as comparing apples with apples!
With the deadline for ATO enforcement of the new Independence Code only months away, many Accounting firms are hastily reorganising their audit arrangements to ensure compliance with the stringent new independence rules.
However, weighing up the pros and cons of working with different auditors is more complex than meets the eye. Let's look at some considerations to ensure you make a wise auditor appointment:
Does the auditor have the credentials?
Auditor competence is imperative to protect your clients' retirement savings and your firm's brand reputation. The ATO has been auditing top audit firms to ensure they have appropriate audit processes and are genuinely independent. Has your auditor already been reviewed by the ATO and passed the ATO audit?
Protecting your client relationships
The new Independence Code values communication between trustees and auditors. This is a sensitive issue and you want to choose an auditor who values and respects your client relationships and works with you to resolve any compliance issues in an appropriate way. A good auditor is a good communicator.
Auditor specialisation
A specialist audit firm - one that does not also offer accounting services - is likely to be more knowledgeable because they are focussed on one area of expertise. Importantly specialist auditors are not competing in the market for accounting work, which gives a comfortable boundary around client communication. We are surprised to see some auditor websites that promote both accounting and audit work for SMSFs... it is not compliant with the new Code to provide both services to the same funds.
What size audit firm suits your practice?
The size of the audit firm will affect both workflow processes and how you are treated as a client. An audit firm that is too large may operate like a factory and not give personalised attention, while a very small firm may not have the capacity your firm requires. Medium-sized firms may balance cost, efficiency, specialist knowledge and the appropriate amount of personalised attention. What size audit firm suits your practice?
Staff continuity
Generally, the very large audit firms have a more transient workforce while smaller firms are more likely to offer more staff continuity. Working with the same audit team means you can build both rapport and efficiencies over time.
Australian-based team or outsourced?
Does the audit firm conduct the entire audit process here in Australia or do they outsource to a team overseas? Where is electronic client data accessed and stored? If the audit team are working from home or from overseas, what client confidentiality and data breach protocols are in place?
Audit processes and efficiency
Does the auditor have a systematic and streamlined audit process to maximise efficiency? Do they get the balance right between leveraging technology to save time, while also applying individual oversight and professional judgement as required?
Change-over process
Changing auditors requires an investment of time... you want to make the right choice first up. Ask potential auditors how they work in with your firm's processes to smooth the transition and facilitate an easy change-over. Will the auditor do some trial audits so you can evaluate how well you work together before making a commitment?
Strategic input into building your SMSF practice
Does your auditor collate your firm's SMSF data and provide insights into how well your portfolio of SMSF clients are performing? Accounting firms that are serious about building a healthy SMSF practice value the strategic input of a quality auditor who is also an advisor to their business.
At Saul SMSF we prepare annual Benchmarking Reports so that our client firms can evaluate the health of their SMSF business in terms of compliance, financial performance and operating costs. We also offer attendance and presentations at Board meetings to review these results and advise on strategies to build a stronger performing SMSF practice.
Whether you have an existing arrangement with an SMSF Auditor or not, we would be happy to have a complimentary, confidential meeting with you to review your audit service and ensure quality outcomes for your practice.
