A 2018 federal budget measure to require SMSFs with a good compliance record to be audited once every three years rather than annually will have a sizeable negative impact on SMSF auditors, an accounting industry body said tonight.
In response to the initiative, Institute of Public Accountants (IPA) technical policy general manager Tony Greco said it represented a positive policy move for SMSF trustees as it would reduce compliance costs given they would no longer be subject to yearly audit reviews.
The proposed measure would apply to SMSFs with a history of good record-keeping and compliance, as well as timely annual return lodgement.
However, Greco said it would have a negative impact on the amount of work available to SMSF auditors.
Coupled with the increased crackdown on auditors by the Australian Securities and Investments Commission, it might halt the number of new players entering the field, he said.
“So if you look at the 500,000 to 600,000 super funds that are required to have an audit, to go from 600,000 down to potentially much lower… if all of those [SMSF] funds meet the caveats, that will be a sizeable reduction in the number of audits they’re asked to engage in,” he told selfmanagedsuper.
He added that would have a considerable impact on the sustainability of the business models of IPA members if they were specialist SMSF auditors particularly if it was the only service these practitioners provided.
“They always have an opportunity to provide additional services, but in the superannuation area that requires licensing these days. So they might need to consider other revenue streams if their business model centres around SMSFs,” he said.
The SMSF Association labelled the measure a positive step, with chief executive John Maroney predicting the proposal would cut red tape and was a “fitting reward” for trustees who adhered to the regulatory regime.
However, Maroney added independent audits were essential to the integrity of the sector and said “we keenly await the implementation details of the proposal”.
SMSF Association head of policy Jordan George harboured similar concerns to Greco about the initiative and told selfmanagedsuper the measure could potentially affect the auditing sector as a decrease in the number of audits that needed to be executed would have a negative impact on business.
“Their business models may have to adapt to meet this change and potentially look at how else they can value-add to SMSFs besides compulsory audits,” he said.
Both Maroney and George said the budget largely left super alone, which would come as an “enormous relief” to SMSFs and their advisers.
