ACRs can add value

auditor contravention reports value

An auditor contravention report can add value to the running of an SMSF and as such accountants and trustees should not be fearful of them.

A prominent audit trainer has argued accountants and SMSF trustees should not have a negative view of an auditor contravention reports (ACR) as they are an element that can actually add value to the running of a superannuation fund.

Speaking at the SMSF Auditors Association of Australia SMSF Conference 2022 held on the Gold Coast this week, ARC Super director Ashley Course told delegates: “I’ve heard this comment before: ‘If the auditor is qualifying and [reporting contraventions] all the time or often, are they adding any value to the client?’ Absolutely they are.”

Course referred to a few recent court cases and the subsequent reaction from the SMSF trustees involved to prove this point.

“[Two] very well-known [court cases saw SMSF trustees] argue: ‘If you [the auditor] had qualified [the fund] when you should have, I wouldn’t have lost my money because in year one [the asset and fund] were still worth something,’” he noted.

“’[So] if you had qualified [the fund], I would have gone and cashed [the relevant asset] in and I’d still be $6 million [better off].’”

According to Course, the fear accountants and trustees have of ACRs originates from an inherent misunderstanding of the circumstances that require auditors to lodge them to the ATO.

“[As an auditor] I’m not qualifying [the fund] because of a mischief, I’m qualifying [it] because we just don’t have [sufficient] evidence [not to],” he said.

“Forget what I say, the auditing standards, the courts and the ATO all say if you cannot get evidence [about certain assets of a fund], you have to modify your audit report [or make a] qualification or disclaimer.”

He suggested better communication between auditors and accountants was the key to a better understanding of ACRs, in particular knowing the types of transactions that could lead one being lodged and the actions needed to prevent an SMSF from experiencing compliance issues from it.

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital