The ATO has flagged around 1500 instances of misuse of SMSF auditor numbers (SAN) in the preliminary findings of its investigation into their use on annual returns in the 2017 financial year.
Following a mailout earlier this year to 5446 SMSF auditors to verify the list of funds reporting their SAN on SMSF annual returns, the SMSF regulator said it had detected many instances of potential fraud.
The regulator stated 2319 of the 2739 auditors who responded to the mailout confirmed there had been no SAN misuse, while the other 420 auditors reported 1445 instances of potential SAN misuse involving 626 tax practitioners.
“We’re currently contacting these practitioners to determine whether they’ve deliberately misreported a SAN. So far, we’ve seen some very concerning behaviour,” the ATO said.
“Some practitioners have fraudulently charged clients for audits that didn’t occur and some have even prepared false audit reports with forged auditor signatures. We treat this behaviour very seriously and propose to refer these matters for criminal prosecution.”
It said it would refer fraudulent tax practitioners to the Tax Practitioners Board (TPB) in addition to considering prosecution, and noted a further mailout to SMSF auditors to verify the use of SANs for the 2018 financial year was planned for September and October.
In related news, the TPB has announced it is currently investigating 350 high-risk tax practitioners, with a number of these cases resulting from ATO referrals.
Pointing to cases the board considered in June, TPB chief executive Michael O’Neill said: “Of eight cases investigated under the debt and lodgement project, five tax practitioners had their registrations terminated for failure to meet personal tax obligations, four of these with a five-year exclusion period.
“Of the eight investigations into non-compliance with continuing professional education (CPE) requirements, five tax practitioners were issued with suspensions, three with cautions and all eight ordered to complete additional hours of CPE.”
O’Neill also said six tax practitioners had been recently suspended for three months for failing to lodge their annual declarations.