Communicative Auditors Add Value
Recent court decisions highlight situations where the Auditor did not seek sufficient and appropriate evidence that the assets and liabilities of the fund exist and are clearly owned by the fund, and importantly, where unsecured loans may not be recoverable.
In a recent case, the court cited failure of the Auditor to inform the Trustees that the loans might not be recoverable as negligent and contributing to the Trustee continuing with an investment that it otherwise would not have done.
At Saul SMSF, we have always made communication with Accountants and each of the fund Trustees a priority when we see potential risks.
Issues such as unsecured loans, related party arrangements and unlisted assets demand extra attention and require a greater level of communication between Auditors and Accountants, and Auditors and Trustees. Relationship breakdowns and divorce also require communication - and understanding - between the Auditor and all fund Trustees, not simply the dominant Trustee who contracts advice services to the Fund.
In a post-royal commission environment, Advisors and Auditors must meet the highest professional standards. Shortcuts might reduce an expense line in the short term, but the ultimate cost of long-term risks outweigh the cost saving. Effective communication is simply not an area to compromise – or to automate.
The Real Value of Auditor Independence
Quality Auditors want to protect Trustees, Accountants and all SMSF Advisors by taking care to undertake due diligence thoroughly and to employ first class staff who proactively communicate with Accountants and Trustees to resolve issues appropriately.
If you'd like more information, please contact Saul SMSF.