The average cost of an SMSF audit has continued to fall as the number of auditors has also declined and is probably below the value of the work undertaken by practitioners, according to an SMSF lawyer.
DBA Lawyers special counsel Bryce Figot said while the number of approved auditors declined from 5764 in the 2017 financial year to 3944 in 2020/21, the cost of providing audits had remained static and appeared to be inexpensive for the work provided.
“How much do SMSF auditors charge? Not very much. You guys are all very cheap, to be blunt,” Figot told attendees at the recent The Auditors Institute SMSF Auditors Day in Melbourne.
“If I think about the amount of work everyone in this room has to do every time they open a file, that’s a lot of work for a modest sort of number,” he added, referencing ATO statistics on the average and median auditor fees from 2016/17 to 2020/21.
Those figures show the average audit cost in 2016/17 was $689 and had fallen to $640 by 2020/21, while the median cost had remained at $550 across that five-year period.
“I am no statistician and if I recall correctly an average is when you just add up everything and divide by the number of things you’ve added up, but according to statisticians, the better number is the median,” Figot said.
“So the average means the really big valuable audits appear to be going down in value each year over the last couple of years, but the median value is staying put at $550.
“I suspect that’s including GST (goods and services tax), so $500 plus GST, how much work can we do for $500?
“Remember, that $500 is just the median. When you drill down in the most recent year [for which we have figures], 41.4 per cent of audits were not charged at $500, they were in the zero to $499 band,” he said, adding the ATO figures for the 2021 financial year showed 48.4 per cent of audits cost $500 to $999.
“When you break it down further, 8.8 per cent cost from $1000 to $1999 and only 1.4 per cent of audits cost above $2000 and I reckon there’s a lot of funds out there where to audit it properly would take $2000-plus worth of time.”
