The ATO has flagged it will ramp up its attention on SMSF auditors to determine whether quality and independence standards are being met and it will also assess low-cost audits following industry concerns.
“One of the key areas of focus for us in the coming year is to increase our focus and emphasis on our work in reviewing SMSF auditor quality and independence,” ATO superannuation assistant commissioner Kasey Macfarlane told the SMSF Association Sydney chapter breakfast yesterday.
“The reason for that is that the SMSF audit that each SMSF has to undergo each year really is somewhat of a quite unique self-check process within the system, so if we can have confidence that that process is actually working as intended, it gives us a greater level of assurance about compliance in the sector more generally.
“On a couple of particular things that we will be looking at is the issue of so-called low-cost auditors and I know that’s been an issue for the industry for some time and every time I come to an event like this, it’s always a question that I get asked.
“We are actually going to have a focus on that and we’re going to be reviewing their activities.”
However, Macfarlane noted low-cost audits did not automatically mean bad audits.
“There are lots of factors that play into that, including technology, automation, economies of scale, market pressures, pricing pressures, et cetera, which could lead to lower prices in the audit market,” she said.
“But just a couple of things that concern us there is if we see guaranteed low fees for audits without regard to the complexity of the audit and a further concern will be guaranteed low-cost fees regardless of complexity combined with a guaranteed short turnaround time – some are advertising three to five days – so that will be one of the areas of risk we’ll be looking at.”
She also highlighted the issues around developments in relation to the automation of the audit process.
“Automation is fantastic and it certainly does help SMSF auditors undertake their role, but we would be concerned if we’re seeing audits being undertaken that solely rely on those automated processes without the auditor actually applying their professional skill and judgment,” she noted.
“[Auditors] actually need to be having a look at what’s going on in the fund and considering that in the context of the various regulatory issues that might arise.
“So that’s a snapshot of some of the things that have our attention at the moment.”
