Auditing, Compliance

Audit shopping checks still required

Auditor shopping compliance record engagement letter

Auditors must check the compliance record of any potential clients with professionals the trustee has previously engaged prior to servicing them.

SMSF auditors have been warned to be cautious about new trustee and accounting clients seeking a second opinion and of their obligation to inform any potential client reviewing files from their previous or current auditor will be necessary as a due diligence measure, according a senior industry professional.

Tactical Super director Deanne Firth acknowledged auditor shopping does take place but being direct with new clients about their obligations under the APES 110 Code of Ethics for Professional Accountants (APES 110) makes it clear the shopping exercise may not yield a different result.

“I have experienced auditor shopping a few times and I send an email to the accountant, if I get the ethical letter from the new auditor, stating I am still obligated to notify the ATO about what I find and that usually gets me some information and reveals the whole reason for [why] they are shopping for an opinion,” Firth told delegates at the Auditor’s Institute SMSF Auditors Day held in Melbourne last week.

“We had a case where we were shopped an opinion, and while I thought the other auditor was wrong, we didn’t take on the job because we said you have already an auditor and they have also lodged an audit contravention report,” she said.

Firth added where an auditor does agree to engage with a new client, particularly where an auditor shop is taking place, they should take no action until a signed engagement letter has been received.

“Be aware that if someone does an auditor shop, and you have pulled up heaps of queries, make sure you have got an engagement letter signed before you start.

“Do not send those queries until you have got an engagement letter signed, because otherwise you were not engaged,” she cautioned.

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