While the SMSF auditor registration requirement has reduced the number of individuals servicing the sector, it has improved the quality of the audits being performed, according to a senior official with the Australian Taxation Office (ATO).
“There are now about 7000 approved SMSF auditors and there were probably around 10,000 before registration was required, so it’s a drop of about 25 per cent,” ATO superannuation assistant commissioner Matthew Bambrick told last week’s Institute of Chartered Accountants in Australia business forum in Sydney.
“However, the 7000 or so left were doing about 90 per cent of the audits. So what that means is the ones who have dropped out were the ones doing the smaller number of audits.
“That’s, we think, a good thing because those who were only doing three or four audits a year generally showed less knowledge of the requirements and it means we should have a better range of auditors from the ones we have left.”
Bambrick said the ATO’s approach to the registration process had so far been more educational, but was now changing to have a greater focus on compliance.
To this end the regulator has identified a few areas of concern to which it will pay close attention.
“The thing that concerns us is basically the genuineness of the audit,” Bambrick said.
“So we check for auditor compliance [and] competence, because that affects the genuineness and quality of the audit, but we also check for other things like independence.
“It means they have to be free from undue influence and strangely enough we do sometimes see some of that.”
He said the ATO had actually come across situations where the SMSF auditor was being pressured to sign off on the fund’s accounts even though the practitioner had not actually seen the financial statements.
“One of the things we’re also looking at these days is low-cost audits,” he said.
“If there are very low-cost audits that are being offered, it does make you wonder how they’ve been able to do it for that kind of cost.”
Although the ATO would concentrate its efforts on examining low-cost audits, Bambrick said the regulator was not in a position to provide a definition of the type of audits that fell into that category.
