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ASIC, Auditing

ASIC reports on SMSF auditor enforcements

The Australian Securities and Investments Commission (ASIC) has deregistered, suspended or imposed conditions on 101 SMSF auditors for audit quality and independence issues or on “fit and proper person” criteria since the auditor register began in 2013.

To 30 June 2018, the corporate regulator has considered the conduct of over 120 SMSF auditors, including 98 matters referred from the ATO.

ASIC has removed 76 SMSF auditors from the auditor register, suspended one auditor for a period, and imposed conditions on the registrations of a further 24 auditors.

The regulator’s actions in relation to the 101 auditors related to not meeting auditor independence requirements, not complying with auditing standards, not identifying or reporting non-compliance, and not meeting a “fit and proper person” requirement.

The types of further conditions imposed by ASIC have included restrictions on the funds that can be audited, limiting the number of SMSF audits that can be conducted and having audits peer reviewed with the results being reported to ASIC.

Furthermore, ASIC has enforced additional training requirements, passing the SMSF auditor competency exam, strict time frames for responding to the ATO or ASIC, and providing notice of registration conditions to professional associations.

“SMSF auditors perform an important role in giving independent assurance over fund financial reports and reporting non-compliances with fund requirements,” ASIC commissioner John Price said.

“As gatekeepers, they are expected to adhere to the highest standards in the performance of their role.

“ASIC will continue to take action where the conduct of SMSF auditors is inadequate.”

Since 1 July 2013, the Superannuation Industry (Supervision) (SIS) Act 1993 has required all auditors of SMSFs to be registered with ASIC.

Under the SIS Act, ASIC also has the responsibility for setting competency standards and imposing any administrative standards to ensure all SMSF auditors meet the required standards of competency and expertise.

ASIC and the ATO work closely together as co-regulators of SMSF auditors.

The ATO monitors the conduct of these auditors and may refer compliance matters to ASIC as the registration body.

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