Arguments the federal budget measure to allow SMSFs to switch to a three-year audit cycle will reduce compliance costs are myopic, according to an accounting body.
Institute of Public Accountants (IPA) chief executive Andrew Conway said SMSF trustees may be required to have a three-year audit at greater total cost than the current 12-month review.
“Will the unsubstantiated audit cost saving be worth the significant risks such a measure introduces?” Conway said.
He added paring back the audit cycle will not boost regulatory oversight and transparency in the SMSF sector.
“We know, that now more than ever, in the financial services space, sunlight is the best disinfectant,” he said.
“Without an annual SMSF auditor oversight, how will the regulator of the SMSF sector monitor compliance? These issues go far beyond the impact on SMSF auditors and speak to the very confidence and transparency of the SMSF sector.”
The IPA revealed it is working with Revenue and Financial Services Minister Kelly O’Dwyer and Treasury over the proposed changes to the SMSF audit cycle.
Under the proposal, SMSFs with a good compliance and record-keeping history will have the ability to switch to a three-year audit cycle.
SMSF Association chief executive John Maroney recently commented on the issue, saying while the association welcomed measures that cut red tape for SMSF trustees, he would like more detail to understand the implications of the proposal.
“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,” Maroney said.