SMSF auditors are required to provide a high standard of evidence in their reports and cannot adopt a relaxed attitude to this information, with court cases highlighting the standard required of them, a sector specialist has noted.
The Auditors Institute ambassador Graeme Colley said the ATO had set a high bar for what it expected to see and reiterated that recently when it highlighted common failings it continued to see in audit files.
Addressing this guidance in a webinar today, Colley noted the ATO was serious about adequate documentation being provided and had long held this view.
“You have only got to look at some of the court cases and tribunal cases. They really do set a higher bar for auditors of SMSFs,” he said.
“It’s quite onerous the effort they have to go to, particularly in regards to independence, but they get picked up for that.”
Colley, who previously worked at the ATO in the area of superannuation litigation, noted auditors did have a higher standard placed on them than tax agents, which was why they had to provide more detailed information in their audit files.
“Some of the evidence courts relied on while I was with the ATO means it is quite an onerous task and what will be considered reasonable evidence is more than the ‘it will be okay’ approach,” he said.
“You have to be pretty genuine in the evidence you provide and it has to be very good or special evidence in some cases.”
The ATO’s expectations were released in an update on its website last week, where it stated that when reviewing audit files it often found notes that failed to explain how an auditor reached their conclusions or assessed the fund’s compliance with superannuation laws and regulations.
Additionally, the regulator found procedures or checklists that only showed ‘tick’, without any supporting explanation, notes that used vague or minimal detail but did not describe the evidence obtained or how it was evaluated and notes misrepresenting the fund’s actual circumstances.
It also stated it found identical notes appeared across different audit files, which suggested the auditor did not tailor their work for each fund.
