The total number of SMSF auditors has continued to decline and the trend may continue due to the impact of independence standards and fee requirements, according to an SMSF technical expert.
Accurium head of education Mark Ellem said an examination of the ATO’s SMSF statistics indicated a decline in the number of audits performed for a particular financial year, as recorded via SMSF annual returns (SAR), from 10,165 in 2012 to 4969 in 2019.
“That last figure might be lower than the actual number of auditors who performed an audit in that year because at the time the statistics were produced not all the 2019 SARs would have been lodged or audits completed,” Ellem said during a webinar today.
He noted, however, the register of auditors held by ASIC also showed a decline in the number of available registered, independent auditors who can conduct an SMSF audit.
“This register is a more current indication of the supply of SMSF auditors to meet the demand for the audits needed and looking at the end of June 2020 to end of June 2021 there has been a net loss of 208 auditors [from 5699 to 5491] or a drop of 3.65 per cent,” he said.
“Looking at the numbers from the end of June 2021 to the end of September 2021, there has been a further net loss of 85 auditors [from 5491 to 5406] and if we annualise that, it is a 6.19 per cent decrease, which is double the annual rate for 2021.”
He said this decline was taking place while the total number of SMSFs was increasing at an annual rate of up to 3 per cent and was likely to create pressure on the audit sector.
“If we use the figure of 597,900 SMSFs [as at June 2021] and the number of registered auditors at the end of September of 5406, that’s an average of 110 SMSFs to be audited per auditor,” he said.
“That does not sound like much, but if you consider the 2018/19 ATO annual SMSF stats reported that 65.4 per cent of all SMSF audits were completed in that year by auditors who on average completed 50 or less audits in that year, the 110 number does not look that small.
“These statistics also focus on the period leading up to the ATO enforcing its revised independence standards from 1 July 2021 and it will be interesting to see the continuing effect of the standards and the effect of any audit fee benchmark on auditors in the industry, on new entrants, and what may happen to the price of audits if we see a growth in the demand for SMSF audits, but a drop-off in the number of auditors.”
