Regulators are increasing their focus on SMSF auditor independence ….
In recent years regulators (particularly the ATO) have targeted SMSF compliance. A number of reviews, including the Cooper Review of Australia’s Superannuation System identified SMSF auditing as a compliance weakness and recommended legislated Auditor independence. Whilst not yet legislated, the ATO has begun undertaking data matching exercises comparing the addresses of SMSF tax agent and SMSF auditor addresses. The ATO’s views regarding SMSF auditor independence are summarised below:
Independence is crucial for your SMSF auditor
Your SMSF must be audited by an approved auditor prior to submitting your SMSF annual return. As this professional audit provides a valuable opinion on the status of the fund, including the auditor’s assessment of the fund’s compliance with super laws, it is crucial that the auditor you appoint is independent and meets the necessary standards for an SMSF approved auditor. After examining the financial and compliance aspects of the SMSF, your auditor should provide you with their findings in writing, highlighting any financial and compliance issues your fund may have. Your auditor needs to provide their report on the operation of your SMSF in the form we approve. We call this the Self-managed superannuation fund independent auditor’s report (NAT 11466) …..
As well as being independent, an auditor needs to be free from bias towards, personal interest in and any association with a fund that they may be asked to audit. Your auditor may not be able to accept an audit if their independence is threatened. Threats to independence include, but are not limited to, the following situations:
- they are (or become) a trustee, director of a corporate trustee or a member of the fund
- they are (or become) a relative or close associate of you or another trustee of your fund, of a director of a corporate trustee or of a member of the fund
- they have personally prepared the accounts and the statements for the fund and year being audited.
If your auditor were to undertake the audit of your fund in the above or similar situations, we would consider this a significant breach of professional requirements and would take appropriate action. – ATO SMSF Newsletter, http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00257622.htm&page=5&H5
Genuinely independent SMSF audits reduce risk for you, and your clients ….
DIYSuperAudit believes it is in the best interests of accountants and advisors with SMSF clients to outsource the SMSF audit function. Key benefits of outsourcing the SMSF audit to a specialist firm such as DIYSuperaudit include:
- Genuinely independent audit represents best professional practice and lowest regulatory risk
- Reassures clients you are pro-actively adopting best practice and minimising risk on their behalf
- Potentially reduces your PI policy costs
- Frees staff from compliance work – enables staff to concentrate on higher value & more interesting work
- Potentially lower cost than undertaking audit work using in-house staff resources – DIYSuperAudit offers pricing certainty with out pre agreed fixed pricing
- Assured Service levels – DIYSuperAudit Engagement letter outlines guaranteed performance levels & fee reductions for non-delivery
- No threat to client relationships – DIYSuperAudit does not offer any other accounting services and provides you with written commitment not to contact your clients directly without your invitation
As specialists who focus exclusively on the audit of self managed super funds we have developed a depth of experience which we apply in the conduct of our audits. We are happy to discuss with you any potential issues you note in your clients SMSFs.