ATO, Auditing

Auditors slow to respond on SAN misuse

SAN misuse

SMSF auditors have been slow in coming forward about the misuse of their auditor numbers, but the ATO has increased action on reported cases.

Less than half of SMSF auditors have responded to ATO requests to report SMSF auditor number (SAN) misuse, but the regulator has increased its enforcement action based on the information received.

ATO SMSFs approved auditors portfolio superannuation director Kellie Grant said the regulator had completed two mail-outs to auditors checking on SAN misuse, but did not receive responses from more than half in both requests.

“Only 50 per cent of auditors responded to the 2017 mail-out and for 2018 only 40 per cent responded, and we were hoping for a higher response rate,” Grant said, addressing an audit discussion group at the SMSF Association 2020 National Conference on the Gold Coast today.

“The purpose of the mail-out was to weed out those funds that have not had audits or were inadvertently reporting someone had done the audit when it was done by someone else.”

Grant said despite the lower-than-expected level of responses, the ATO was able to take action against a number of tax agents misusing SANs.

“With respect to serious cases of deliberate SAN misuse, where they are forging signatures or retaining audit fees and not arranging an audit, we do refer those to the Tax Practitioners Board (TPB) and have referred those where they lodged the return and then did the audit,” she said.

“We referred seven agents to the TPB last year for SAN misuse and in this financial year we are already up to 15, and this is all coming from our mail-outs.

“The more serious ones are off to prosecution and we have a couple of cases running at the moment that we hope to see a result later this financial year, and if we can get a decent outcome, hopefully that will act as a deterrent.”

The 2020 mail-out will be sent in August and the ATO will be looking for further issues related to SAN misuse, she said.

“What we find in the 50 per cent of auditor responses from the mail-out it is less than 1 per cent of funds where we see SAN misuse,” she said.

“Where we do come across serious SAN misuse, we refer them to our tax-agents-of-concern area and more often than not they find other issues as well.”

The regulator has revealed it has identified one definite instance of illegal use of a SAN it considers criminal, with two others likely to be classified in a similar manner, and recently the Australian Securities and Investments Commission took action against six SMSF auditors.

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