The ATO has revealed the evidence accounting firms will need to provide from 1 July as proof the amended auditor independence standards have not been breached.
Speaking at the virtual SMSF Association National Conference 2021, ATO SMSF auditors portfolio director Kellie Grant said: “We expect to see the following. We want to see evidence that the auditor was satisfied that the firm did not assume any management responsibilities for the SMSF.
“So that means we’ll even get to the actual tax accountant in the firm, for instance, who is managing the fund and we will ask them what sort of decisions did you make on behalf of the fund this year.
“[In addition, we will ask] can we see your files so we can be satisfied that there weren’t any decisions made on that fund that might amount to a management responsibility where you’ve exercised professional judgment, which means when the auditor goes through to review that work there’s a self-review threat.”
According to Grant, the regulator will also be wanting to sight evidence the SMSF trustees involved possessed the relevant skills, experience and knowledge allowing them to properly prepare the financial statements for the fund should an accounting firm classify its non-assurance services as routine and mechanical.
“So we’ll be looking for copies of the trustee-coded transactions which the firm used to post in the general ledger perhaps, or be looking for client-approved entries to the trial balance. Something to demonstrate to us that the trustee took on those management decisions,” she said.
She pointed out the ATO could go as far as to contact the trustee to verify they have the knowledge and skills to perform the bulk of the accounting function for the SMSF and understood they had taken responsibility for the fund’s financial statements.
Further, she reiterated signed financial statements on the audit file and trustee representation letters stating the trustee took responsibility for preparing the fund’s financial statements would not be adequate proof the accounting firm’s procedures were of a routine and mechanical nature.
