We recently noticed a complaint from one of our accounting firm clients, that the SMSF auditors we were using (we switched to a panel of SMSF auditors) were making things difficult by asking for signed documents from the trustees, pieces of information to prove ownership and valuation, and generally just making the SMSF audit process a lot more difficult, in their words “more difficult than the last SMSF auditor”.
Their prior SMSF auditor had been shedding clients after an ATO review noted the poor quality of documentation supporting the SMSF audit opinion.
At the same time, there’s been plenty of action in the SMSF audit space.
There has been a couple of high profile legal cases that have landed the responsibility for SMSF investment failures clearly at the feet of the SMSF auditor (or at least their insurance company).
And the ATO has released copious amounts of information giving fair warning to SMSF auditors that there needs to be sufficient documentation to support the SMSF audit opinion.
The ATO have been presenting at a lot of the online and (until recently) offline conferences, making it clear the SMSF audits in the marketplace need to improve.
At the same time, ACR’s are in the spotlight and there needs to be a clearly followed procedure followed for the issuance of ACR Auditor Contravention reports, in which a stern email to the trustees isn’t going to cut it anymore.
More information is going to be required, including current valuations, and proof of ownership. One accountant complained that the owner of the SMSF was in their caravan travelling around Australia, and it was frightfully inconvenient to request they prove the SMSF owned a particular asset. It could be months until they were home and could put their hands on the documents.
There needs to be documentation on file, and frequently signed by the trustees, before the SMSF audit opinion is released. Australian accountants have resisted the changes, especially requesting the trustees sign various pieces of documentation at various times through the audit process. They bemoan it’s just simpler to have the trustees sign the documents in one go when they visit to sign off on their SMSF return low.
Whilst the recent independence guide shed some clarity on the removal of “Chinese walls”, there still seems to be a long way to go in educating the Australian accountants, as well as the SMSF trustees, on the importance of an SMSF audit done well.
However, given the current relationship the Australian accountant has with the trustee, with information frequently passing through the accountant, and without the co-operation of the Australian accountant (frequently under pressure to shop around for a cheaper SMSF audit), then the SMSF auditor and the SMSF audit process is going to face an ongoing uphill battle to ensure a quality SMSF audit.