SMSF contravention record on the line

The Institute of Public Accountants (IPA) has warned the federal government it is putting the SMSF sector at risk of increasing contraventions with its proposal to change the annual audit requirement to a three-yearly cycle.

“[The policy] may be very well intended, but could well be misdirected,” IPA chief executive Andrew Conway said.

“There are other ways to reduce the red tape involved in managing SMSFs.”

Conway underscored a well-functioning SMSF sector is a by-product of good regulation.

“The SMSF auditor plays a vital role in providing the regulator with assurances that SMSF trustees are playing by the rules,” he said.

“According to the latest ATO statistics, the percentage of the SMSF population with auditor contravention reports is approximately 2 per cent of all SMSFs each year.

“Does the government want to put at risk the current record of good compliance?”

He said not working with trustees in the unsupervised, or unaudited, years may result in an increase in contraventions if the measure proceeds.

“Not addressing contraventions on a timely basis can result in the costs growing exponentially, as well as presenting a systemic risk,” he warned.

“The annual audit cost may be begrudgingly paid by trustees, but most trustees would see this as a form of insurance as the penalties imposed by the ATO for contraventions can be significant.

“Without the annual and timely audit oversight, we are concerned that the low rate of contraventions may start to reverse for the sake of a potential small reduction in costs over time. A loss of integrity in the SMSF sector is simply not worth the risk.”

The IPA is urging the government and regulators to look at alternative ways to reduce the compliance burden and costs associated with SMSFs.

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital