The Australian Securities and Investments Commission (ASIC) has suspended the registrations of three Melbourne-based SMSF auditors for breaches of the independence standards following referrals from the ATO.
ASIC said Huiting Li of Docklands, Wuzhao Fang of Malvern and Xuan Wu of Burwood have had their auditor registrations suspended for one year.
An ASIC investigation found the individuals had breached their independence obligations by receiving the majority of their clients from a single referral source, an SMSF administration provider.
The corporate regulator determined the practitioners, who represent three separate firms, had conducted audits for “thousands of SMSF clients” and derived more than 99 per cent of their fees from the administration platform.
It concluded the practitioners had not met their requirements under the APES 110 Code of Ethics for Professional Accountants, with their actions constituting self-interest and intimidation threats to their independence as auditors that were unable to be safeguarded against.
Wu subsequently requested a review of the decision, with an ASIC delegate going on to confirm the suspension. Additionally, the practitioners may also request to have the decisions reviewed by the Administrative Review Tribunal.
ASIC reminded practitioners they are responsible for reviewing and assessing any referral arrangements, especially if these could lead to a dependence on fees from a single source and the regulator has the capacity to suspend auditors under section 130F of the Superannuation Industry (Supervision) Act.
Recently the ATO has intensified its focus on ensuring SMSF auditors meet independence standards after identifying ongoing issues in this area, particularly in relation to sole practitioners.
These enforcement measures follow a series of similar actions that originated from ATO referrals, with 45 auditors disqualified or suspended in 2023/24. Of these, 11 cases were directly linked to breaches of the independence standards.
