SMSF auditors are not a dying breed, says professional
Although it may seem SMSF auditors are coming under fire from increased ATO scrutiny, the industry is not being decimated as a recent article in The Australian newspaper may suggest, says a leading educator in the sector.
The article, published in The Australian on 4 September, claimed “SMSF auditors have been quitting in droves and others have had their licence taken away by ASIC. If the same rate of attrition continues there will be none left in a few years”.
It continued that “in more dramatic developments, the licence of over 400 SMSF auditors was cancelled by ASIC this year, reducing SMSF auditor numbers by about 25 per cent”
However, Shelley Banton, head of education for ASF Audits, said the article ignores essential facts about SMSF auditors and the critical role they play in the industry.
She explained that what’s happening is actually natural attrition in SMSF auditor numbers and that this will likely continue based on the fact that a large number currently conduct less than 50 audits annually.
“The most recent annual data released by the ATO in 2020–21 showed that 44 per cent of SMSF auditors perform 5–50 audits, and 23 per cent perform 51–250 audits,” she told SMSF Adviser.
“Eight per cent of SMSF auditors conducted more than 250 auditors, representing 68 per cent of the total SMSF audits undertaken.
“This means that 25 per cent of auditors are auditing less than five funds.”
Ms Banton also noted that the article ignores the role technology plays in SMSF audits.
“The article conveniently ignores that SMSF auditors are using technology to its fullest capacity, which means that serviceability is not an issue,” she said.
“This is well documented by the eight per cent of SMSF auditors undertaking 68 per cent of the total number of audits.”
Moreover, she noted that while the ATO has taken action towards monitoring the compliance of SMSF auditors in recent times, it did not undertake any SMSF audits during the COVID-19 period.
Other areas to consider include the APES 110 Code of Ethics for Professional Accountants’ introduction of new independence requirements for SMSF auditors and ASIC’s reduction in exit fees.
“All these factors have contributed to compressing reduced SMSF auditor numbers into a smaller timeframe”.
The article also insinuated that SMSF trustees face higher fees as a result of the rising attrition rate. Namely, it said: “SMSF trustees should expect to pay around $500-$600 for an SMSF audit. And in what is not good news for SMSF trustees, audit prices are likely to continue to climb with the regulatory pressures unlikely to ease up any time soon”.
In response, Ms Banton said: “Given the cost of inflation, wage growth, technology and service expectations, it is unrealistic to expect that fees will not increase.”
She further added that ASF Audits continues to “attract auditors into the industry through its graduate program”.
“We will continue to support the SMSF industry by ensuring the next cohort of SMSF auditors are trained to the highest standard and quality.”
One thing she does agree with, however, is the article’s insinuation that “SMSF auditors play a crucial role to protect the integrity, validity and accuracy of the SMSF records and ensure the SMSF is compliant with superannuation rules”.
