The ATO has identified adherence with the amended auditor independence standards as stipulated in APES 110 as an area of high risk with regard to compliance and as such it will be an issue of regulatory focus this year.
“Our high-risk auditor compliance is starting to become a stronger focus for us, particularly issues in relation to compliance with the independence standards impacting upon firms that provide both non-assurance and auditing services to an SMSF,” ATO SMSF approved auditor portfolio director Paul Delahunty told delegates at the SMSF Auditors Association of Australia Conference held in Melbourne recently.
“Last year we had a strong education focus and issued detailed guidance on our website and produced a webinar to help firms comply with the standards. The guidance provided further details on the standards impacting in-house audits, as well as some of our concerns around restructuring arrangements.”
As a result of this educational approach and the materials provided to the industry as part of it, Delahunty said the ATO expects firms have now familiarised themselves with what is expected in this aspect of their practices.
Evidence of the auditor independence compliance enforcement was this month provided by the Australian Securities and Investments Commission when it took action against 19 practitioners for breaches with this standard.
In addition, Delahunty took the opportunity to remind auditors of a new protocol they now have to apply.
“Auditors also now need to ensure they’re now using the using the updated SMSF independent auditor’s report to ensure they’re complying with the standard,” he advised.
“The new version must be used for all audits completed on or after 1 July 2021 regardless of the income year reported on.”
Further, he revealed the regulator is in the process of finalising an update to its SMSF auditor checklist that will capture the key independence considerations for auditors.