The SMSF auditing community has begun actively rallying against the proposal handed down in last Tuesday night’s budget to allow SMSFs with a good compliance and record-keeping history the ability to switch to a three-yearly audit cycle.
To this end, Evolv founder Ron Phipps-Ellis recently published a blog called “Let’s take action together” encouraging his peers to join his discussion on the subject and work collaboratively to prevent the proposal in its current form from being passed.
In the piece, Phipps-Ellis is critical of the fact the industry was not properly consulted prior to the announcement.
Further, he has predicted problems with the policy from a compliance, independence and resourcing perspective.
Specifically, he has identified some of the consequences that will arise as a result of the change.
These include a drop in registered SMSF auditor numbers, an increase in the price of audits conducted, a reduction in the quality of audits as practitioners face a challenge to maintain their skill levels, a reduction in the willingness and ability to implement new auditing techniques and technological advancements, and the resulting need for more compliance resources at the ATO.
The SMSF Association has again weighed in on the argument, also identifying the effect of reduced activity on business practices.
“SMSF auditors need to understand the detail of how less frequent audits are expected to be conducted in a manner that increases efficiency so they can understand the effects on their clients, on their professional obligations and on their businesses,” SMSF Association chief executive John Maroney said.
SMSF Association audit discussion group chair Belinda Aisbett emphasised the critical role auditors play in running a super fund.
“SMSF auditors play a key role in ensuring the SMSF sector is highly compliant with the taxation and superannuation laws,” Aisbett said.
In a LinkedIn post, she likened the proposal to the government installing a speed camera on the road once every three years, a move she said would only increase the number of speeding drivers.
Areas she forecasts could be problematic in the proposed change include the avoidance of contributions caps, asset value manipulation to adhere to contributions caps, minimum pension amounts not being paid, asset acquisition breaches and non-complying limited recourse borrowing arrangements.
In addition, she flagged work-flow management and retention of staff as issues practitioners will face.
As a consequence, she has also raised a call to action, encouraging anyone with concerns about the proposed SMSF auditing changes and wanting to be a part of the lobby group intending to inform the government on the impact of these changes to contact her.