The ATO has confirmed it is aware of all auditor contravention reports (ACR) that are lodged, but it is restricted as to what information it can pass back to SMSF auditors regarding action taken against trustees.
Addressing the question of why there was little feedback to auditors who lodge an ACR, ATO SMSF director Kellie Grant pointed out the regulator did act upon issues raised in such a manner but noted it was limited by law as to who receives associated communication.
“We respond to the trustees themselves when an auditor lodges a contravention report because that is protected information in regards to the fund,” she told practitioners during a presentation to The Auditors Institute today.
“What we decide to do when it comes to any action we take against a fund after an ACR is lodged is protected information we can only share with the trustee or their authorised representative, which is usually their tax agent.
“That is why we will usually send letters telling those funds what we plan to do or if the breaches are quite serious, we will select them for audit, but privacy and secrecy provisions prevent us from telling the auditors what we’re doing.
“If an auditor did want to know what came about, they will have to go to the tax agent or the trustee and ask them for that information.”
Further Grant indicated the ATO typically acknowledges receipt of the lodgement of an ACR and reviews each one received.
“When you lodge the ACR through [the] Online Services for Business [portal] you get a receipt ID that confirms we have received that ACR, but what you might be asking is: ‘How do I know the ATO has looked at it and is taking action?’” she said.
“We do review all ACRs and have a process in place where we treat them with the issuance of a letter if we can see the contravention is low risk, such as an administrative breach, and especially if the breach has been rectified.
“For higher-risk breaches, we send those to audit to get reviewed, so we do have a system in place where we actually look at all ACRs and treat them in some way, depending on the level of risk.”
