The current capability of automation within SMSF administration services was not yet at a point where it could be substituted for the judgment of a human adviser, according to a panel of executives.
During an SMSF session at the Accountants’ Technology Showcase Australia 2017 Conference in Sydney yesterday, Smithink founding director David Smith explained there was a tendency of relying more on the technology once processes were automated, resulting in compliance risks such as where automated documents did not comply with the fund’s trust deed.
“People are happily going along, producing documents from certain providers, but they don’t actually go back to see if it even complies with the deed,” Smith said.
“Are you worried about this issue?”
SuperConcepts chief executive Natasha Fenech said the SMSF administrator and software provider has been educating its clients on the issue.
“Education is key here, whether it’s the trustee or the accountant or financial adviser, and ensuring they know that the trust deed is the control document and checking if the technology they’re using is supporting them and aligned with that [the deed],” Fenech said.
Smith then questioned whether the sophistication of automation could solve this problem automatically.
Class chief executive Kevin Bungard referred back to an example in the United States where artificial intelligence (AI) has been used to codify the US tax system.
“I think if you’re just looking at the raft of all the deeds that are available for SMSFs and got AI to try to interpret that for us, it would be difficult,” Bungard warned.
“So at the moment we’re really relying on human judgment and relying on the firms doing the administration, as well as the trustees and advisers to really get this right.
“There’s not a lot we can do today in terms of interpreting a deed, so determining whether or not the actions you’re taking lines up with the deed, plus every week there’s news about a new interpretation or flow-on effects from what the legislation is doing and how that interacts with deeds.
“It’s too hard at the moment and really does need people to be on top of it.”
BGL Corporate Solutions managing director Ron Lesh added that his firm has tried to keep all its documents as general as possible.
“So they don’t refer to clauses and deeds, et cetera, but we do make the assumption that the deed allows you to do that particular thing you’re doing – maybe that’s a wrong assumption,” Lesh noted.
“But with most things, we’re still suggesting that clients go back to their deed provider and go back to their specialist advisers and lawyers to check over it to make sure what’s going on is correct.
“And certainly if you’ve got an old deed, there can be a lot of issues from it.”
Commenting on how far SMSF administration can be automated, Fenech revealed SuperConcepts has built a lot of workflow capabilities to automate even more processes.
“As an administrator, we see all the processes, a lot of which can be automated, so we’re certainly on that journey to automate quite a core element of those processes,” she said.
“My view is that while you can automate a large chunk of it, you’ll still need human judgment because there will always be those exceptions.
“But it’s also about the coordination of automated administration and automated audits – I think we need to move to real-time audit, for example, and have the two processes going together because that’s where you start to drive benefits.”