SMSF auditors have been strongly advised to reference crucial resources issued by the ATO to ensure they uphold compliance when conducting fund audits, according to a specialist lawyer who has noted more scrutiny in this area from the regulator.
DBA Lawyers special counsel Bryce Figot pointed out specific resources have been made available to auditors so they can ensure they remain compliant with their regulatory obligations and avoid legal or regulatory consequences after he noted advising and representing them was making up a growing portion of the legal work he currently undertakes.
“The ATO have an ongoing project of auditing approved SMSF auditors and, quite frankly, it’s pretty vigorous,” Figot told attendees of a DBA Lawyers webinar last Friday.
“The scrutiny that approved SMSF auditors receive from the ATO and then the Australian Securities and Investments Commission is probably a lot more vigorous than any other type of professional review that any other professional I’m familiar with receives.
“What can an approved SMSF auditor do to best protect themselves? Well, amongst other things, be constantly checking back and applying ATO web page quick code (QC) 45566. If you’re an auditor, you should have it tattooed on your inner eyelids.
“It is the web page where the ATO set out in writing very expressly their minimum expectation of what they want to see in every audit file.”
He alerted practitioners to a potential anomaly in the guidance, which was clarified by the ATO last year, particularly in respect of the recent compliance instruction to check for charges over assets held in SMSFs.
“The key reason [why the ATO wants auditors to perform a property title search] is for charges over titles,” he noted.
“If you didn’t have to worry about charges over title, I think you could probably satisfy the ATO with a prior-year title search. Admittedly, if you look at QC 45566, it doesn’t expressly say to do a title search for every title in every year.
“[However] in August last year, the [ATO] released a special short-term web page that says the auditor should obtain evidence annually and that was the first time they expressly publicly said [to do a title search annually].
“If you want to have a nice simple life, if you want the ATO to just look at your fund, be happy instantly and give it a nice green tick, pat you on the head and send you on your way, you just do a search for every title, every year.”