The ATO will focus its compliance work regarding SMSF auditors on those who engage in a high number of audits, undercharge for their services or do not meet independence requirements.
The regulator outlined its priorities in a statement on its website, which also said it would look at evidence behind market valuations and ensure auditors were notifying the ATO in the event a trustee was disqualified, but still acting for a fund.
Auditors who handled a high volume of SMSF audits were flagged as an area of concern and could expect direct contact from the ATO, it noted.
“This includes auditors that regularly undertake over 1000 audits per year or who have had a rapid increase in their audit numbers in recent years,” it said.
“We will be visiting auditors at their offices to review their audit process.”
The regulator added it collects a range of data and intelligence about the SMSF auditor population to identify auditors considered to be high risk and as part of this work it had concerns about those who operated under low-fixed-price business models.
“These models inherently restrict the amount of time an auditor can spend on an audit and can lead to lower-quality audits, particularly where the SMSF has more complex investments,” it observed.
Compliance with independence requirements was also an area of concern, with the ATO stating approved SMSF auditors must uphold those standards and it would target those deemed high risk.
“Following an increase of referrals to ASIC (Australian Securities and Investments Commission) in the last financial year that included independence issues, we’ll be focusing on auditors we consider high risk,” it said.
“This includes auditors conducting in-house audits, with reciprocal auditing arrangements, that have a long association with clients and have a large proportion of their client base come from a single referral source.”
It also emphasised auditors must verify and retain sufficient evidence to support the market value of assets and consider modifying the independent auditor’s report and lodge an auditor contravention report (ACR) when required.
“In 2024, the ATO contacted auditors where SMSFs they audited reported unchanged values for certain assets across several income years. In 2025, we will continue this program, including reviewing auditors where asset values remain the same and no ACR is lodged,” it said.
It also highlighted that auditors must ensure trustees were not acting for their fund while disqualified and it would review auditors who did not report that activity via an ACR.