The auditor fee independence threshold could be increased from 20 per cent to 30 per cent and a new transition period of five years introduced under proposed revisions of standards under consideration by the Accounting Professional & Ethical Standards (APES) Board, according to the SMSF Association.
SMSF Association deputy chief executive and director of policy and education Peter Burgess said following the introduction of the 20 per cent threshold in May 2021, the APES Board was considering amendments, including a revised threshold, that would take effect on 1 January 2023.
“You might remember in the original amendments they put out last year, the APES Board talked about this 20 per cent threshold and these amendments are designed to mitigate or reduce the independence risk associated with auditors generating a significant amount of their income from say one or just a small number of clients,” Burgess said at the recent SMSF Association National Annual Conference 2022 in Adelaide.
“Based on feedback provided by the SMSF Association and others, the APES Board has now come up with revisions to those amendments and they are looking to increase it to 30 per cent and are looking to introduce this five-year transition period for new firms, as well as for existing firms.”
He said existing audit firms will have five years from 1 January 2023 to bring their fee arrangements within the 30 per cent threshold and new firms from 1 January 2023 will have five years from the date of commencement of business.
The association will be supporting the changes to the provisions via a submission and any members who wished to also comment had to do so by 29 April, he added.
The 20 per cent threshold has been a source of concern for the body and audit firms, which have previously expressed their concern over the lack of a transition period and that the threshold was inconsistent with international standards.