Auditors have been told to take away the practical lessons learnt from the recent outcome of a court decision where an SMSF auditor was found to be liable for losses as well as acting negligently.
At the Chartered Accountants Australia and New Zealand SMSF National Conference 2018 in Melbourne today, BDO Australia partner Shirley Schaefer highlighted the case of Cam & Bear Pty Ltd v McGoldrick, where the auditor was found to be 90 per cent responsible for the loss when it was appealed this year.
The auditor was also found to have breached the duty of care and acted negligently.
“We have this precedent now and the only way [to change it] is if the auditor decides to challenge the decision later down the track,” Schaefer said.
“But I think it’s timely to learn lessons from this, although I also think it’s conflicting with the proposed three-year audit cycle.”
She underscored at the very least the outcome has taught SMSF auditors not to rely on verbal assurances and to check actual documentation.
“Don’t rely on trust and your relationships. You need to check everything,” she warned.
“Also, even something as simple as how something is described in the financial statement is important to us when we’re doing these audits.
“We certainly need to be checking financial statements and also understand what backs certain investments in order to be able to determine it exists, that it’s valued correctly, that it’s complete and accurately portrayed in the financial statements of the super fund – we can’t ignore this.
“So I do think there are lessons for us as auditors from this case.”
Where SMSF auditors cannot get information, they should never feel scared to qualify the audit report, she said.