ATO Focus on Auditor Independence
The ATO is cracking down on SMSF auditor independence. 31 auditors have been referred to ASIC this year, a 41% increase from last year. ASIC has also disqualified a number of SMSF auditors over the last few months for breaching independence requirements of APES 110 Code of Ethics for Professional Accountants.
Raising the Bar
The government is also proposing an auditor registration fee of $1,927 for SMSF auditors, a 1700% increase from the current $107. We interpret this move as gearing up to more effectively monitor and regulate the quality of registered SMSF auditors.
A Chinese Wall may not equal genuine audit independence
A key issue the ATO is focussing on, is referral networks and how commercial interests have the potential to compromise professional standards. When a firm has a heavy reliance on fees generated by a particular source or where an auditor has a close personal or business relationship with that referral source, the ATO is concerned.
Questions are also raised when a medium-sized firm uses an interstate office or a so-called "Chinese Wall" between divisions to conduct their own audits. Can there be genuine audit independence when there is an implicit conflict of interest underpinning the working relationship?
Embrace the value of genuine independence
Genuine audit independence protects your firm, your clients and your reputation. Impartial advice and professional judgement helps you to make the right decisions, which delivers the best outcomes for your clients and your practice.
While Accountants are well advised to be prudent around the ATO’s focus on genuine independence to avoid penalties, the more important point is embrace the benefits that genuine independent advice gives your firm.
Why miss out on impartial advice and also create a longterm risk, simply to create a marketing funnel of work to another division in your firm? Keep the objectives clear and make the first - and only - priority to manage your SMSF practice professionally.
At Saul SMSF we encourage accounting practices to embrace the value that comes with real independence. Contact us for more information.