The regulator determined that Wuzhao Fang, Huiting Li, and Xuan Wu breached independence requirements by auditing thousands of SMSF clients from a single SMSF administration provider referral source.
The provider offers online SMSF setup and administration, including assisting trustees in complying with tax, accounting and audit obligations.
The auditors received more than 99 per cent of their overall audit fees from the online platform as a result of the SMSF administration provider’s engagement of a limited number of SMSF auditors.
ASIC found this created self-interest and intimidation threats to the auditors’ independence that could not be safeguarded against.
It stated that auditors must carefully evaluate referral arrangements, particularly where it created a fee dependence.
Wu’s decision was reviewed at her request and an ASIC delegate confirmed the suspension decision. ASIC’s decisions may also be reviewed at the Administrative Review Tribunal upon application by the SMSF auditor.
ASIC and the ATO co-regulate SMSF auditors. The ATO monitors SMSF auditor conduct and refers matters to ASIC. ASIC also monitors the SMSF auditor population for non-compliance and is empowered to disqualify, suspend, cancel or impose additional conditions on the registration of SMSF auditors.
The ATO’s referral stated it would continue scrutinising the source of SMSF audit referrals.
ASIC may suspend an SMSF auditor’s registration under section 130F of the Superannuation Industry (Supervision) Act. SMSF auditors have the right to appeal decisions ASIC makes concerning their registration.
Frankly, I’m sick of high volume SMSF administrators & auditors. They give the SMSF industry a bad name.
SMSF service providers are diverse and a “cottage industry” for a reason. SMSFs are heavily reliant on the skills and experience of the SMSF practice professional, and one person can only service so many clients.
These often overseas sausage factories dish up SMSF admin and audit to busy accountants who don’t specialise in super, who often “flick pass” them to the client, with little or no review, value add, or even assurance that it is right or wrong.
Without proper review and delivery at this end, or client education, they just breed the type of yokel SMSF trustees that make the rest of our lives miserable as they don’t accept the strict rules, argue like it’s our fault, and don’t want to pay. I’m sick of cleaning up their messes!
Setting up a SMSF for free should be a crime. Perhaps we even need a SMSF trustee “drivers licence” before we start handing SMSFs out to every hillbilly with a wi-fi connection!
So this means that SMSF Administrators who look after 1,000’s of funds – will need to check with the auditor if APES 110 Para 410.14 applies to them or not (30% of fees from one referral source) – if that is so – then all SMSF Auditors who audit only for one SMSF Administrator can get suspended.
These auditors should spread their referral source and limit the funds they can audit for one SMSF Administrator – on the other side SMSF Administrators will have to deal with a large number of auditors.
Many SMSF Administrators use only a small number of auditors – this will definately change.
Shouldn’t the SMSF administration provider be sanctioned as well? Can somebody please explain?
What significance does this have to other SMSF auditors especially those who swap audits with other accountants?
P.S. I refuse to do any SMSF work.