ASIC, ATO, Auditing, Compliance

ATO refers record number of auditors to ASIC


The number of referrals of auditors to ASIC by the ATO has climbed to its highest level in five years due to concerns about independence and evidence gathering.

The ATO has referred more than 40 SMSF auditors to the Australian Securities and Investments Commission (ASIC) in the past financial year, an increase of more than double the amount of auditors referred in the 2022 financial year.

In an update on its website, the regulator stated it had referred 41 auditors to ASIC, which is the highest referral rate in five years, during the 2023 financial year, compared to 17 referrals in 2021/22.

The most common reasons for referral to the corporate watchdog were auditors breaching the independence requirements for in-house audit activity and failing to gather sufficient audit evidence for market valuations and related-party transactions.

Other leading reasons were failing to adequately document audits and not identifying and/ or reporting contraventions for matters such as fund borrowings and inadequate documentation for limited recourse borrowing arrangements.

“SMSF auditors play a critical role in maintaining the integrity of the SMSF system and the rate of referral reflects how we are better utilising data to ramp up our compliance actions to address auditor behaviours which put retirement savings at risk,” the ATO stated.

In July 2022, ASIC disqualified five auditors and imposed conditions on three others, and also disqualified five auditors in November 2022, imposing conditions on one practitioner.

In April 2023, seven auditors were disqualified, conditions were imposed on three others and one registration was cancelled, while in July this year, five auditors were disqualified and conditions imposed on three others due to referrals by the ATO.

In July, ASIC also announced it had cancelled the registration of 413 SMSF auditors for failing to lodge their annual statements.

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital