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New standards to alter trustee view of audits

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The new auditor independence standards will result in an improved perception of the SMSF auditor’s role by trustees, an SMSF specialist says.

The new auditor independence standards will help trustees see the real value of the SMSF audit process, an SMSF specialist has said.

Seamless SMSF business development manager Jo Hurley said the restructured APES 110 Code of Ethics for Professional Accountants enforcing restrictions on financial statements and audits being prepared by the same party would result in a change in perception of the SMSF auditor’s role by trustees.

“I think auditors add a lot of value to the SMSF space whether the trustees realise it or not,” Hurley said today at the Chartered Accountants Australia and New Zealand (CAANZ) National SMSF Conference Online 2020.

“One of the reasons that I think there is maybe a lack of awareness of auditing is it’s seen as just an expense and because practically the structure of our industry has seen it be generally the choice of the accountant or the adviser as to who the auditor is versus the trustee. So trustees have in general shown a fairly low level of awareness of the identity or brand of the auditor that is engaged on the job and that they are paying for.

“It is really important that we are showing as professionals respect for the specialisation of the SMSF audit and the value that we do bring as an independent set of eyes.”

During the conference, ASF Audits head of education Shelley Banton pointed out the pricing pressure placed on SMSF audit services had also encouraged the perception of the SMSF audit among many trustees as a ‘grudge purchase’.

“An audit has been looked at as a commodity; it goes to the person who can offer the cheapest price. It just means that at the end of the day, all we’re entering into is a price war,” Banton noted.

“I think for a long time this has really impacted our ability to be able to get across the value of an SMSF audit.”

Last month, CAANZ reporting and assurance leader Amir Ghandar said the new auditor independence standards would reinforce the essential role SMSF auditors have in protecting the retirement savings of trustees and maintaining the integrity of the sector.

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