ATO, Auditing

SAN misuse reporting at new high

SAN misuse reporting

Auditors have responded positively to an ATO call for data regarding SMSF auditor number misuse, providing more insight into errors related to the annual audit process.

The ATO has received the largest response so far to its regular SMSF auditor number (SAN) misuse survey, with more than two-thirds of nearly 5000 auditors reporting to the regulator, allowing it to identify that more than 1300 funds has misreported details.

In an update on its website, the ATO stated it received the responses in regards to audits conducted for the 2019 income year and it had written to 4899 auditors overseeing 479,635 funds.

It highlighted that 67 per cent of the auditors responded, which is the highest rate for a SAN misuse survey, and revealed the number of funds audited by the respondees and those that would require further examination.

“The responses helped us confirm that 287,459 funds received an audit by the auditor reported in the 2019 annual return,” it said.

“It also revealed that 1315 funds did not correctly report the auditor on their return.

“We will soon be reaching out to the tax professionals of these funds to determine whether the SAN misuse was a result of inadvertent or deliberate reporting.”

Client lists for the 2020 income year will be sent to auditors later this calendar year and the ATO reminded auditors they could reduce the number of SMSFs for which they had to confirm audits by lodging an audit complete advice via the regulator’s online services portal for businesses.

The ATO also has reminded SMSFs to ensure they meet deadlines for their transfer balance account report (TBAR) and SMSF annual return (SAR) where applicable.

Some SMSFs will have a TBAR date of 28 April, where a transfer balance account event occurred in the fund between 1 January and 31 March 2021 and any member of the SMSF has a total super balance greater than $1 million.

The ATO noted both events have to take place for reporting to be made by 28 April, but where this did not occur, other deadlines still applied.

This included where any member exceeded their transfer balance cap, received an excess transfer balance determination and commuted the excess, requiring the fund to report the commutation to the ATO within 10 business days after the end of the month in which the commutation occurred.

Where a fund had been sent a commutation authority, it must comply with it and report that compliance to the ATO within 60 days, and where an SMSF had been issued a determination or commutation authority that relies on incorrect or incomplete reporting, the fund must correct or complete the reporting as soon as possible.

For SMSFs required to lodge their SAR by 15 May, the ATO stated they should have appointed an auditor by 1 April to meet the SAR lodgement deadline.

“In preparation for your lodgement, you also need to complete a market valuation of all your assets, prepare your fund’s financial statements and provide signed copies of these to your auditor so they can determine your financial position and your fund’s compliance with super laws,” it added.

Earlier this week, the ATO released details about the implementation of the SuperStream system for rollovers, noting the use of the system was optional from 1 March 2021 and would be mandatory from 1 October 2021, and SMSFs need to ensure their details were registered in the system via the ATO.

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