The ATO has changed its stance on auditors reporting contraventions within an SMSF that occurred due to COVID-19-related relief and will now require them to include those contraventions in their independent reports.
The change in position was announced by the ATO via an update to its website, which referenced the June 2020 update to its Independent Auditor’s Report (IAR) instructions under which auditors did not need to modify their opinion in Part B of the IAR in regards to contraventions arising from the impacts of COVID-19 for the 2020 and 2021 financial years.
The ATO stated those amendments were supposed to align the IAR with changes to the Auditor Contravention Report (ACR) instructions under which the same contraventions did not need reporting as the ATO would not be taking compliance action against them.
In the latest update, however, the regulator noted feedback from auditors since the start of the current financial year has carried concerns with this strategy given the wording in the opinion clause of the IAR has not been changed to exclude these types of contraventions.
It added since it was not planning to change the current IAR wording for the 2020 financial year, “we have reverted the IAR instructions back to their original wording to alleviate these concerns and ensure consistent auditor reporting”.
“This means auditors will once again be required to modify their opinion in Part B of the IAR where they identify any material breach of the provisions and regulations listed within the IAR,” it said.
“The addendum to the ACR instructions has not been changed. Those instructions still provide details of certain contraventions we have advised will not need to be reported in the ACR as a result of the impacts of COVID-19.”
Auditors who have used the previous version of the instructions when conducting any 2019/20 audits to date will not be required to recall those audit reports and reissue them, it stated, adding those auditors will be considered to have met their reporting obligations if they correctly followed the instructions.
