In the midst of a week that has seen ASIC suspend or disqualify several SMSF auditors, many Accountants have received an email from an SMSF Audit firm offering audits with a "modest" fee structure and the email went on to say:
"we eliminate the compliance and recruitment challenges"
Really? I find this very concerning.
Nobody can guarantee a compliance outcome. Such promises are not only false, but also reckless in terms of undermining the purpose and value of a quality, independent audit.
Auditors who make such promises do nothing for reliability in the SMSF industry and also undermine the reputation of auditors in general. Furthermore, accounting firms who commission such providers diminish their own brand reputation, not to mention put their firm at risk of potential litigation down the track.
A rigorous audit is your friend because it protects both your firm and your client's retirement savings. It's not about beating the system, but working safely and wisely within it.
ASIC disqualifies auditors
With regard to the auditors suspended or disqualified this week, ASIC has advised that the reasons include:
• deficiencies in maintaining auditor independence
• deficiencies in audit work on the ownership and valuation of fund assets
• issues around whether a transaction was on an arm’s-length basis
• issues around lease and loan agreements issues around execution of trust deeds
• inadequate review of the investment strategy by trustees
• issues around limited recourse borrowing arrangements
• issues around in-house asset requirements
• lack of compliance with CPD requirements.
The ATO is serious about quality audits
The ATO began a review program of auditors in last year and of the 51 auditors examined to date:
• 10 were fully compliant
• 36 required further education
• 3 voluntarily deregistered
• 2 were referred to ASIC for further action.
SaulSMSF is proud to be one of the compliant audit firms already reviewed by the ATO.
Are there enough quality auditors?
I begin to wonder whether quality auditors are a scarce commodity? If some audit firms are so naive in their marketing proposition as to offer "elimination of compliance challenges", then how could they possibly deal appropriately with our sophisticated and evolving regulatory framework? The price of an audit is meaningless if the audit was not adequately undertaken. A cheap price tag masks the hidden cost and risk of overlooking compliance issues.