As SuperAuditors’ director for eight years, and having always had a keen interest in programming, Shelley Banton has lived and breathed technology’s influence on SMSF audits. She tells Krystine Lumanta how the audit space is handling these developments and why disengaged trustees will continue to be the biggest challenge.
How did you get your start in the SMSF industry?
I was involved with the establishment and set up of an audit firm that was contracted to WorkCover NSW to undertake workers’ compensation wage audits, where I then stayed on to manage that business. In 2006, a new opportunity came up in relation to establishing an online SMSF audit business. I started with two other directors and a blank sheet of paper. It was up to me to work with software providers to develop the service, which took 12 to 18 months to design and test. We went live in 2007 and became the first audit firm in Australia to have a secure audit portal for our clients to upload documents, and we had automation in the backend of the software that enabled us to provide a fairly streamlined process. The portal also allowed our clients to see exactly where the audit was up to and they could email us through it. At that point, there wasn’t much around in terms of cloud service providers. And at the time, the audit was totally manual. If you walked into an auditor’s office, there would be stacks of paper reaching the ceiling and racks of files because trustees would’ve mailed in all of their information and documents. That was something I never wanted to have in our business, so we were electronic through the audit portal from day one. Several years later, SuperAuditors is still going strong and we’re continuing to develop our programs and software.
What other roles have you undertaken that inform the way you manage SuperAuditors?
After I left uni, I went on to work for a large private sector corporation where I was primarily working in risk and analysis. Back then, we worked on large operating systems, which were clunky and a bit temperamental. So to make my life easier, I got involved in programming. I saw first-hand the power and efficiency of being able to streamline those workflows, so I continued to develop my programming skills. I guess I’ve always had an interest in IT.
Why did you decide to take on the SMSF Association (SMSFA) Specialist SMSF Auditor and Advisor designations?
I first joined the SMSFA in 2008. It seemed to be, at that point, the only industry body that was focusing on SMSFs and offering an accredited specialisation to its members. It took me a couple of years before I embarked on my accreditations and I passed them both the first time. The experience was very gratifying. There’s a lot of personal satisfaction.
Is SMSF specialisation heading in the right direction?
I agree with SMSF specialisations and it’s fabulous to see the number of specialisation courses that are now being offered, but it’s going to take trustees some time to develop an understanding of exactly what they mean. But I certainly believe eventually they will start seeking out SMSF specialists, as opposed to someone who doesn’t have the accreditation, because it promotes more confidence in those advisers who have gone the extra step.
Are there opportunities via the audit function accountants and advisers can leverage off in terms of their clients?
The main opportunity is for accountants to use their auditor as a sounding board, particularly for technical references concerning potential issues with their clients. In turn it will enable them to provide more proactive advice. Of course, there are other things they can provide, for example, I know of some accountants who have offered one-day conferences to their clients for the auditor to come and speak to them. So from a communications point of view, there are a few add-ons they can use. But the best thing they can do is to use their auditor more to touch base and find out how to rectify any breaches that crop up because once the horse has bolted, all we can do is try to get it back into the stable as best we can.
Will technlogy ever replace the need for accountants and advisers to have a relationship with an SMSF auditor?
With a background in programming, I don’t think that writing a program or an algorithm encompassing everything in the Superannuation Industry (Supervision) legislation is going to be happening anytime soon. I know that there’s some fantastic software out there that provide a lot of notifications and reports et cetera about what’s happening in the fund. But issues that are outside the square won’t necessarily get captured by that algorithm. That’s what I’m talking about when I say it’s difficult to get to the 100 per cent point of SMSF audit automation. At the end of the day, human beings are running their funds, not robots, so it makes a difference when you’re dealing with a human auditor. You need to have somebody who can understand not only what the legislation is, but more importantly how to apply it to every unique client situation. Will a program pick up an in-specie contribution was made where the shares were priced at a date before the fund was even established? There are so many issues that are difficult to program in until it happens.
How do you see the audit piece evolving and will it be quite different from how it currently works?
There’s going to be rationalisation in the audit space. There are audit firms that have their own technology, systems and processes, but there are also other service providers out there that are offering the ability for auditors to use their technology online. That’s something we looked at several years ago when we were setting up, but we decided that we weren’t a software company. And while I can see that it would be a lot of fun to offer what we do Australia-wide to auditors, we’re not a software firm. I think auditors who are entering the market now are looking at the cost/benefit of setting up their own system versus using an online audit system that they can access quite easily. Certainly, that comes down to your own business choice and regardless of what path you choose, if you’re going to be auditing any reasonable volume of SMSFs, you really need to consider technology. The days of Excel spreadsheets will no longer be sufficient.
What are your thoughts on the cheaper audit services popping up?
The commoditisation across products across the industry is a problem, certainly for SMSF auditors. I can’t compete with an audit firm who offers a $300 fee for every fund, regardless of its structure or assets, and has a turnaround time of half an hour or less. That’s not a level playing field, but they are out there. We have not seen a reduction in any other service provider’s fees to the extent we have in audit. I don’t see accountants or lawyers offering one fixed fee for every single client they work on. The model doesn’t work. The cheap fee, one-size-fits-all business model uses a low profit margin to attract volume. The ATO is looking at them closely, so all the rest of us can do is sit tight and be confident in the service we provide, knowing that we’re ticking all the boxes in terms of our professional obligations.
What’s the most significant change you’ve seen, either positive or negative?
I don’t think the continued growth of the industry is cooling off at this stage. So I’d say the biggest change has been, again, the commoditisation of SMSF products and services, audits included. And that race to the bottom, in terms of pricing. I think at times people believe technology equals cheap. Technology takes time, effort and commitment to develop. It’s an enabler, allowing you to process a lot more efficiently, giving you time to concentrate on the other areas of the audit, which is what should be happening for accountants and auditors alike. In terms of the commoditisation, there needs to be more personalised service and advice to SMSF trustees. I spoke with an SMSF auditor at a conference who told me they had road-tested low-cost SMSF auditors and after emailing the documentation to one particular auditor, they received a signed audit report back in 10 minutes. No signed terms of engagement or trustee rep letter, and that was being offered at $300. It’s a tough area to compete in, but we know we’re doing the right thing and we’re meeting our professional obligations.
What is the key challenge for the industry over the next 12 months?
One of the key challenges we face is disengaged SMSF trustees. We need to work out how we can really engage them because to be an accredited specialist, to stay up to date with the latest SMSF legislation and have access to a peer support network that’s trusted, it doesn’t seem to be enough anymore. I think we need to figure out the connection to being an SMSF specialist and getting the message across to SMSF clients. The reality is there are more compliance failures amongst trustees who don’t receive advice and the biggest contributor in relation to that is the volume of information available on the internet. I can research all I want on earthquakes, landslides and volcanoes, but that doesn’t make me a geologist. There are serious repercussions when trustees get it wrong, so we have to work out how we can recognise the causes of disengagement, such as a lack of perceived value and trust, and adjust what we’re doing in the industry accordingly. If we can get that right, it’s a good start.
