Auditors must factor in recent changes to the Code of Ethics for Professional Accountants to ensure they are not in breach of new independence standards, the ATO has said.
ATO SMSF auditor portfolio director Kellie Grant highlighted the new Independence Guide released by the Accounting Professional & Ethical Standards Board (APESB) and the need for SMSF auditors to adhere to it.
The guide was developed by APESB, in conjunction with Chartered Accountants Australia and New Zealand, CPA Australia and the Institute of Public Accountants, and incorporates changes to the recently restructured APES 110 Code of Ethics for Professional Accountants.
Grant said the guide is mandatory for audits in Australia and needs to be followed by SMSF auditors to ensure they were not breaching new independence standards.
“As a result of the restructured code, the guide now makes it quite clear that an SMSF auditor cannot audit an SMSF where the auditor, their staff or their firm has prepared the financial statements for that fund, unless it is a routine and mechanical service,” she said at the SMSF Association Technical Day 2020 today.
She noted the ATO would expect to see evidence the trustee had taken responsibility for their fund’s financial statements when examining whether the SMSF audit satisfied the ‘routine or mechanical’ requirement.
“When monitoring whether the preparation of accounts by the auditor’s firm is routine or mechanical under the new standard, the commissioner will expect to see appropriate evidence on the auditor’s file that the trustees took responsibility for the financial statements and had sufficient knowledge, skills and experience to do so,” she said.
The regulator would provide further guidance during the current financial year in order to help auditors comply with the routine or mechanical requirement, she added.
“Auditors will have this financial year to try and get on top of this new standard and look at their particular engagements and look where they need to restructure [in order to comply with the new requirement],” she said.
In May, the ATO reminded SMSF auditors of their responsibilities and obligations as it flagged a number of areas of concern stemming from performance reviews of their work.