A specialist SMSF practitioner has confirmed the relevant professional standards do not allow auditors to rely on the information contained in reports released by wrap account or investment platform providers in isolation.
ARC Super director Ashley Course cited Australian Auditing Standard ASA 402 A.26(c) in acknowledging additional information is required before a year-end report from an investment platform or wrap account can be considered reliable evidence.
To this end, the standard states where the user entity, in this case the SMSF, maintains independent records of balances and transactions, confirmation from the service organisation, that is, the platform provider, may constitute reliable audit evidence.
Further, it stipulates if the user entity, in this instance the SMSF, does not maintain independent records information, confirmations from the service organisation, the platform provider, do not constitute reliable audit evidence.
Course pointed out adherence to this standard will increase the work auditors will have to undertake in their year-end procedures.
“So I’m thinking how do I [manage] this and also, more importantly, stick to the auditing standards. [My conclusion is] I’m going to have to create a fancy internal controls questionnaire and give it to the trustees [to complete],” he told delegates at the Auditors Institute Auditors Day in Melbourne last Friday.
“[It means I’ll be telling them] if you don’t want a qualified audit report, you have to prove to me that you have internal controls and if you can’t prove to me you have internal controls, I’ve got to do what the auditing standards say.”
In addition, he predicted the cost of the annual audit for funds using an investment platform will rise as a result.
“[So] I’m going to have to charge more because now I’m going to have to review these [items],” he noted.
“[So now] I’m going to have to review, assuming they give me [the information], the internal controls of the SMSF trustees and if I’m going to rely on them, I’m going to have to test that they’re working.”
