SMSF firms reminded to retain audit separation

SMSF audit separation

The ATO has reiterated that SMSF accounting firms should not complete audits for a fund where it also provided oversight and advice to the trustees of the fund.

SMSF accounting firms have been reminded by the ATO of their obligation to adhere to auditor independence standards and ensure an audit for a super fund is not completed under any circumstances if any fund responsibilities have been managed by the same firm.

Speaking during a recent webinar, ATO SMSF auditor and portfolio director Kellie Grant said this prohibition applied even where the preparation of the accounts for the fund might be routine or mechanical.

Grant said fund responsibilities “comprise activities that generally require the exercise of professional judgment and examples can include setting policies and strategic direction, authorising transactions, controlling or managing bank accounts or investments, and deciding which recommendations of the firm or network firm to implement”.

Those recommendations could also include decisions about the structure of the fund, preparing its trust deed and maintaining the fund’s investment strategy, Grant said, adding they also extended to decisions about accepting contributions, paying benefits and the preparation of fund accounts and financial statements based on transaction data.

“As many trustees rely on tax professionals such as their accountant or administrator to assist and manage their funds and make certain judgments and decisions for them, we think firms and network firms who provide both auditing and assurance services are likely to find it difficult to comply with the management responsibility rule in practice,” she said.

To avoid non-compliance with independence standards, she suggested an SMSF accounting firm be satisfied with the trustees’ ability to make decisions consistent with their obligations under superannuation law.

“This includes ensuring that the trustee has suitable skills, knowledge and experience to remain responsible at all times for decisions relating to the fund. They understand the objectives, nature and results of the services,” she said.

“They understand their responsibilities and those of the firm in connection with the services and that they’re overseeing the services provided by the firm in evaluating whether [the firm is] adequate, and they accept responsibility for any consequences or actions that flow from the results of those services.”

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