The key findings of two recent court cases will significantly impact on the process of SMSF audits in the current financial year, according to an SMSF audit expert.
At the Chartered Accountants Australia and New Zealand 2019 National SMSF Conference in Sydney today, Ernst & Young executive director Matina Moffitt said the auditors’ failings in Ryan Wealth Holdings Pty Ltd v Baumgartner (2018) NSWSC 1502 and Cam & Bear Pty Ltd v McGoldrick (2016) NSWSC 1894 would shape audit processes from now on.
“Some of the key things that we’re going to be made to do as auditors going forward is principally not because there were problems with [the original process], but because it was used as evidence in these court cases, which I, in some ways, don’t believe we should be really focused on, but we’re going to be forced to focus on,” Moffitt noted.
She highlighted the key findings in both cases, which included failure on the auditors’ part to:
- inquire into and report on the fund trustee’s compliance with its investment strategy,
- bring serious misdescriptions, misstatements and other factors, including the conflict of interest of the accountant, to the fund trustee’s attention,
- obtain sufficient appropriate audit evidence to support the classifications, valuation and recoverability of fund assets, and
- notify the fund trustee of material and significant matters concerning the fund and to qualify the audit report as required.
“The crux of [these cases] was the auditor didn’t do the audit correctly,” she said.
She pointed out audit obligations themselves had not changed, despite changes to the auditing process.
“What we will find is we will probably have to tweak the way we do some things and, in particular, communication with our trustees,” she added.
