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ATO, Auditing

ATO letters flag auditor number misuse

The ATO has flagged concerns about the use of SMSF auditor numbers.

The ATO has sent letters to SMSF auditors listing funds they audited in the 2017 income year to enable them to verify if their SMSF auditor number has been misused.

Auditor and Super Sphere director Belinda Aisbett told selfmanagedsuper she was one of around 2000 auditors to receive the letter from the ATO on 5 March.

After checking it off today, Aisbett found around six SMSFs she had ceased servicing or had never audited before had listed her SMSF auditor number in their tax return.

“That means those funds have put me down as their auditor even though I haven’t done the audit,” she said.

“There’s also a couple of funds on the list where I used to be the auditor, but I’m not anymore. Now that may be because the tax agent hasn’t updated the tax return information correctly, but it also might mean the fund has got the auditor details and has just lodged the return without having to worry about an audit.”

She said she and other SMSF auditors have carried out a sustained campaign for 10 years asking the ATO to allow auditors to access the list of funds that record their auditor number in their tax returns.

“For years we’ve been asking the ATO to get us our list because we’re reasonably confident that there were funds on there that we’re not auditing,” she noted.

“And the ATO could never provide that information to us for confidentiality and legal reasons. But they’ve finally got over that hurdle and now they’re in a position where they can tell us who put us down as an auditor on their tax return and that’s where those lists have come from.”

The ATO announced it has sent 93 SMSF lists to approved auditors thus far and in response to feedback, at the end of this quarter, the ATO will share the list of funds with auditors in three waves.

This action will continue to be performed annually.

In terms of penalties, an ATO spokesperson told selfmanagedsuper nearly all trustees work with the regulator to self-rectify, with the ATO taking strong enforcement action in only the most serious cases.

“The most serious action we can take in response to a breach is to disqualify the trustee. We will do this where we are concerned that allowing the individual to remain as a trustee presents a future compliance risk or risk to retirement savings,” the spokesperson said.

“It is one of the ways we protect the integrity of the SMSF sector. A trustee will only be disqualified after other enforcement actions have been considered.”

At the SMSF Association National Conference 2019 in Melbourne last month, the ATO flagged it would notify auditors of all funds that have quoted their SMSF auditor number for 2017 so they can cross check for deliberate misuse.

ATO assistant commissioner Dana Fleming told delegates at the conference the regulator has noted increased incidences of auditor number misuse, with 100 SMSFs represented by 22 tax agents under investigation.

Of the 40 per cent of case investigations completed, it was found 15 per cent of funds deliberately misused auditor numbers.

Five tax agents were referred to the Tax Practitioners Board in the 2018 financial year and one has been referred so far in the 2019 financial year.

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