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Covid-19 drives changes to Accounting Firms

The Covid-19 pandemic has thrust rapid change into many industries, not least the Accounting and SMSF sector. With many firms overloaded with advising and implementing on Stimulus measures and SMSF regulatory changes (much of the work not billable), there has been a push for a government-funded Voucher system to support the costs to Accountants in enacting Stimulus measures on behalf of the government. Do you agree with a Voucher system? Firms have also had to re-think their operating procedures due to social distancing restrictions. Recent announcements from the ATO regarding e-signatures for SMSF financial statements may cause a hastening to leverage technology. What is the impact of this on compliance and SMSF auditing? Let's take a look at the impact of recent news and you can have your say in our industry survey, which is being used to aggregate the opinions of Accountants and SMSF firms to advocate for the industry. E-signatures and avoiding delays With trustees unable to sign SMSF financial statements in person due to Covid-19 restrictions, the ATO has clarified its signature requirements. Under section 35b of the SIS Act, financial statements have to be signed:

  • where there are individual trustees, at least two individual trustees

  • where there is a single corporate trustee, at least two directors of the corporate trustee

  • where there is a single corporate trustee and there is a sole director, the director of the corporate trustee

Trustees are required to sign their SMSF’s financial statements before finalising their fund’s audit each income year.

If trustees are unable to sign financial statements in person, the ATO suggests: 1. Returning a signed scanned copy to your tax agent or accountant by email. or 2. Returning a signed hard copy to your tax agent or accountant by mail, or 3. Using an electronic signature such as a digital signature.

Security of Digital Signatures - trustees with shared email addresses The ATO said digital signatures should be provided:

  • using a secure system, typically through an established third-party provider

  • in a way that clearly identifies the trustee signing and indicates the approval you are providing

From an auditor's point of view, it is important that if there are a number of trustees signing, each trustee needs to be individually identified. Accountants need to be mindful that mum and dad clients who share an email address will need to have separate identification to validate each of their digital signatures.

“A secure system would include a system that requires a personal identification number, access code or password to use,” the ATO said.

“You will not meet the signature requirement if you only acknowledge the financial statements by email or over the phone.”

Benefits of Digital Signatures Assuming that digital signatures meet security and identification criteria, they offer a number of benefits:

  • Save time – you don’t have to wait for meetings in person or to receive documents by mail, which drives efficiencies and cost savings.

  • Convenience – once an e-signature system is set up, it is more convenient for accountants and trustees alike.

  • Flexibility – documents can more easily be stored digitally by trustees, with the option of printing a hard copy as well.

  • Sustainability– electronic methods protect the environment through reducing printing and transport.

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