Financial advisers servicing SMSF clients need to know the difference between a qualified audit report and an auditor contravention report (ACR) and the different implications of each, according to a specialist SMSF auditor.
“There’s a difference between a qualified audit report and an audit contravention report. You can have a qualified audit report that the tax office don’t want to know about,” ACR Super director Ashley Course told the 2013 Institute of Public Accountants National Congress earlier this month.
Course emphasised the need to recognise the distinction between the two as an ACR had more serious implications and some items flagged in the audit review would have no need for Australian Taxation Office (ATO) scrutiny.
“The difference between a contravention and a qualified audit report is this: the auditor has an obligation to form an opinion on a series of provisions of the SIS (Superannuation Industry (Supervision)) Act and the SIS Regulations. There are approximately 25 of them where the auditor has to form an opinion,” he said.
“But the tax office doesn’t want to know about all 25. The tax office only wants to know about 20 of them. So there are about five or so provisions of the SIS Act that the auditor has to form an opinion on that the tax office doesn’t even care about.”
As an example, he identified that valuing SMSF assets at market value was one of the five points the ATO had no interest in.
“So if the auditor was not able to determine what the market value of an asset was at 30 June, not at the date of transaction, the auditor would have to issue a qualified audit report, but he doesn’t have to tell the tax office in a contravention report,” he said.