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ATO flags key SMSF audit concerns

ATO SMSF auditors

The ATO has highlighted a number of concerns regarding the performance of SMSF auditors that it has uncovered as part of its reviews.

The ATO has reminded SMSF auditors of their responsibilities and obligations as it flagged a number of areas of concern stemming from performance reviews of their work.

In an update on its website, the ATO said auditor independence, knowledge of superannuation laws, insufficient documentation and failure to report contraventions to the regulator were all matters of concern requiring SMSF auditors’ attention.

“Where we find matters of concern, we will determine the appropriate action, including referral to Australian Securities and Investments Commission (ASIC),” the ATO stated.

It noted SMSF auditors would be referred to ASIC if they were found to have failed to perform their duties under the Superannuation Industry (Supervision) Act (SIS) 1993 or other law, had breached a provision of the SIS Act or SIS  Regulations 1994, or were not ‘fit and proper’ to be an approved SMSF auditor.

“You will generally be considered by us to be ‘fit and proper’ if you have adequately and properly performed your duties and functions as an SMSF auditor; a good character and appropriate professional abilities (which include competency, diligence, knowledge and soundness of judgment); not been subject to sanctions under any relevant laws (including laws dealing with responsibilities relating to the person’s profession, honesty and business transactions),” it added.

In a related update on its website, it also announced changes to the SMSF independent auditor’s report (IAR) from 1 July 2019, intended to “bring the IAR in line with the equivalent form prepared by auditors of Australian Prudential and Regulation Authority funds”.

It stated additional wording had been added to the IAR to make it clearer how an auditor could make a modification to the audit report where a qualified or adverse opinion is required.

Other changes include clearly outlining the auditor’s responsibilities to ensure they are more consistent with auditing standards and referring to the most recent version of the “APES110 Code of Ethics for Professional Accountants”, which includes the independence standards.

“[The latest version of the code] was issued in November 2018 and commenced on 1 January 2020. All auditors should be complying with this version of the code when conducting the annual SMSF audit,” the ATO noted.

Earlier this year, ATO SMSFs approved auditors portfolio superannuation director Kellie Grant said the regulator was continuing to find problems with SMSF auditors, with the second stage of its review of the top 100 auditors resulting in more auditors being referred to ASIC.

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