The proposed three-yearly audit for SMSFs will shrink auditor numbers, forcing many to leave the industry as practitioners will simply not be able to manage the smaller volume of work over a longer cycle, an SMSF audit specialist has warned.
“This measure will see a contraction of auditors,” ASF Audits technical services executive general manager Shelley Banton told yesterday’s SMSF Association Local Community Event in Sydney.
“At the moment, 95 per cent of auditors do 250 funds or less, that’s the reality.
“How are those auditors going to stagger the workflow for 250 funds or less over a three-year period?
“Those guys are going to move out of the industry so we could end up with potentially somewhere between 5 per cent and 10 per cent of auditors doing the funds in Australia.”
Banton also warned of the impact of a smaller number of auditors trying to manage workflows under this measure.
“They’re simply not going to be able to manage it and we’re going to have to start using offshore processing a lot more,” she said.
“Nobody wants that to happen especially when it comes back to the issue of the security of confidential information of over a million SMSF members.
“And then you’ve got the budget also talking grabbing $450-odd million looking at the integrity of personal superannuation contribution notices – how is that going to be managed because no one will be looking at it for three years.”
She stressed the numerous flow-on effects would ultimately lead to the value of the SMSF audit being questioned.
“Especially when you really look at the ramifications and the real impact of what this is going to do to revenues,” she noted.
“What are we going to do if it gets through, but also what are we going to do if it doesn’t get through?”
She said it was up to trustees to understand their responsibilities and part of that was valuing the SMSF audit.
“They might say they don’t need the audit, but we do need it because nobody wants to see SMSF money being used incorrectly and [as a consequence] lose tax concessions or make the structure redundant and then everyone ends up on the age pension,” she warned.
“I believe in the value of the audit and the integrity of the superannuation system, and to me triennial audits isn’t the way to do it.”
She also noted the government’s audit proposal, combined with continued fee pressures, has created an opportune period to educate trustees on the value and importance of the audit function.