Accountants need to carefully consider the implications a change of SMSF auditor resulting from the new practitioner independence standard dictated in APES 110 can have on their own operations, a specialist practitioner has said.
“If you’re an accountant doing your client’s SMSF administration work, you’re actually going to want to be pretty careful who you really trust to do the audit. That’s because it’s going to impact the interaction with your own trustee clients, it’s going to impact on the efficiency of the processing side and therefore your profitability as well,” Evolv chief executive Arthur Favos told selfmanagedsuper.
Further, Favos warned auditors themselves need to be mindful of picking up new clients from an accounting firm that had previously performed all services for their SMSF clients, but no longer can due to the new APES 110 independence requirement.
“Auditors should be wary of taking over a client from a firm that had actually done the audit and administration internally because these practices tended to worry more about ticking and flicking the numbers from a financial audit perspective rather than a compliance audit perspective,” he said.
“So with these firms you tend to find things aren’t done with the same understanding of the intricate issues in relation to compliance.”
However, he believed the bigger accounting firms with a solid reputation have recognised the significance of the process in recent years.
“I think most accountants and most administrators have moved beyond the attitude that it’s just an audit report and as long as I get a piece of paper at the end, I don’t care how I get through,” he noted.
“The better accounting firms are already seeing the auditor is an important part of protecting not only them but also their client in relation to the running of an SMSF.”
The change to the independence ethical standards for auditors has led some industry stakeholders to forecast up to 200,000 SMSFs will need to appoint a new practitioner or firm to perform the annual audit of the fund.
