A recent industry poll has indicated the majority of practitioners believe the price of SMSF audits will increase due to the need for accounting firms to restructure their businesses to comply with the amended independence standards stipulated in APES 110.
The exercise, which was conducted yesterday during SMSFPD Digital 2021, hosted by selfmanagedsuper in conjunction with Accurium, SuperConcepts and SuperGuardian, showed 73 per cent of practitioners believe SMSF audit fees will rise, but not significantly, as a result of the revised independence requirements.
A further 11 per cent were less optimistic and indicated they thought there would be a significant price increase for SMSF audits caused by the amended version of APES 110.
According to Accurium head of education Mark Ellem, the expectations revealed are unsurprising given other trends within the SMSF auditing community.
“So predominantly we’re expecting that there might be an increase to SMSF audit fees because we’re looking at a potential decrease in the number of SMSF auditors,” Ellem said.
To this end, he pointed out the Australian Securities and Investments Commission’s approved SMSF auditor register had already reflected a noticeable reduction in practitioner numbers.
“Since the end of June 2020, the number of registered SMSF auditors has dropped from 5699 to 5545 at the end of April 2021. So that’s a reduction of 154 practitioners in that 10-month period, an average of 15 per month or around 30 per cent per month,” he said.
Further exacerbating the situation is the statistic that 6.4 per cent of SMSF auditors are servicing 54.3 per cent of SMSFs.
Ellem pointed out with the shrinking number of SMSF auditors comes opportunities for practitioners continuing to service the sector as there will potentially be increased business activity for them.
However, he suggested they have to ensure their practices incorporate certain elements to take advantage of this opportunity.
“Auditors need to review their business’s capacity to take on new clients. This means assessing whether they have the right staffing – the right number of staff and the right type of staff. Does the practice meet the supervision requirements and what about the quality review obligations from the relevant professional accounting bodies?” he said.
“They need to review their audit tools and the technology they need to provide the service.
“And they need to also consider other threats to their independence such as their self-interest threat, their familiarity threat and their intimidation threat, particularly if they’re starting anew and taking on a big block of audits from one referral source.”