In light of the new Super regime - with emphasis on issues such as the valuation of assets - the ATO has announced a crackdown on SMSF auditing. Two areas under particular scrutiny are auditor independence and low-cost audits. So, what do you need to consider with respect to your choice of SMSF auditor?
Independence
One of ATO's compliance targets is to focus on the referral sources of audits. The ATO assistant commissioner says they will examine situations where there is a close personal or business relationship between the firm and auditor. Several auditors have been referred to ASIC related to independence breaches. In some cases, the independence breach was due to also preparing financial accounts for the SMSF audit clients. In other cases there was a failure to verify fund assets. One approach to ensuring auditor independence is to choose a specialist auditor who can demonstrate that they have many accounting clients.
Low-cost audits
In a review of low-cost audits, the regulator found that many low-cost practitioners were not conducting adequate audits in compliance with auditing standards, The assistant commissioner was quoted in SMS Magazine as saying: “If you receive a quote for a service that is significantly lower than others providing that same service, then you do just have to ask yourself why that might be?” Rather than choosing a low-cost auditor who might be forced to cut corners in the audit process, choose a quality auditor who will save your firm in the long-run through protection against the cost of breaches.
Do you need to reconsider who does your SMSF audits?
David Saul sits on the SMSF Association Professional Standards Committee and is happy to assist in a review of your firm’s SMSF audit arrangements.