Speaking at a Chartered Accountants Australia and New Zealand conference in Sydney, ATO director of superannuation Howard Dickinson said there has been a “suspicious amount of activity” where individuals have claimed an auditor has conducted an audit when they in fact have not.
Mr Dickinson said the ATO is currently investigating a number of these cases and has already taken action on 15 complaints.
“It’s actually gone up to 20 [complaints] this week, I’ve had five more people contact me this week,” he added.
In all of the cases investigated by the ATO so far, the auditor numbers were in fact misused, according to Mr Dickinson.
“In all of those cases it was the tax agent who appears to have misled both the trustee and ourselves, and indeed charged the trustee for an audit that never occurred,” he said.
“We are looking at what we’re going to do about those players when we find that,” he said. “When we find it and when we confirm that, we’re going to be very serious about the action we take.”
Mr Dickinson said accountants and trustees should be aware that the ATO is becoming “better at matching what has happened compared to what has been reported to have happened”.
“It’s critical that none of your clients fall foul of any of these things because if we find this is this case, it’s truly a breach of regulatory compliance – it’s a fraudulently misleading statement.
“The penalties, options and treatments are very wide, and we’ll be looking to apply them.”
Mr Dickinson noted that the ATO will also be engaging with larger scale auditors.
“We’re starting to realise that we’ve got a pool of auditors that audit over a thousand funds,” he said.
“If you think about the amount of funds that those auditors audit and the value of those funds, the impact of one of those auditors being good or bad is significant for the whole of the system.”
The ATO will be commencing “a very different process of looking at these [auditors]”, Mr Dickinson said, adding that it will continue to look at tax minimisation in terms of “inappropriate activities to try and build the amount of money and assets invested into an SMSF”.
Dividend washing and the claiming of overseas conference costs from the fund, he said, are some of the specific issues under examination.
i believe that when taking over the SMSF to prepare the accounts, we should have some kind of acknowledgement from the prior year auditor. We were given accounts from a client who had prepared the financials given to the prior year accountant (not us) which were audited by an independant auditor, and when we tried to complete the financial statements, these did not balance nor could we reconcile and yet they had supposedly been audited by an ndependant auditor”.
it leaves some peoples credibility questioned.
Alan’s comment that the auditor should check the previous year’s annual return does not solve the issue, as it does not provide confirmation from an external source. If the party lodging the return, be it an accountant ot trustee, does not disclose a qualified audit on the annual return, the probability is that the document supplied for the next year’s audit is not a copy of the return lodged. While I do not suspect this is a major issue and I am not questioning the integrity of the accountants and trustees with whom I deal, the only way to be 100% certain is to have external confirmation, as we seek with other source documents in conducting the audit.
Poor trustees. If they are not copping a caning from a vested interest claiming they are incompetent, they are next being basically defrauded!!!!
Its been a big concern of mine too. I recently had a new audit to do. But when I contacted the previous auditor, she stated that while she had done the audit from 2 years earlier, she had not done the audit for the previous year.
The trustee had decided to do the accounts himself to avoid paying accountants fees and had just used the prior auditors number and details on the tax return. (fraudulently). I refused to do the audit and reported it to the ATO. Unfortunately I wont get to know the outcome.
But this shows the very real risk of trustees just fraudulently using the details of an existing auditor. – Possibly to save the money for the cost, or other reasons.
We need to be able to download a listing of all super audits that are being attributed to us as per the tax returns. and from there report any false ones.
I think, Eric, an auditor should check the prior year return when doing an audit. It shows (hopefully) what was lodged. If you are the new auditor, your ethical clearance letter will reveal fake auditor details and/or you will know if qualifications have been made.
There are, therefore, other risk mitigation options for auditors.
I am an advocate for SMSF audit reports to be lodged separately from the ITR and matched by the ATO. A simple way to eliminate the false ITR details.
I hope the tax agents who fraudulently lodge returns, deliberately using an auditor’s smsf details (who never performed the audit) have their licenses revoked.
Secondly, I agree with Eric’s comments. Privacy laws aren’t working as intended if smsf auditors are not able to check who’s using our smsf Auditor number to lodge returns.
This is an area that has concerned me, as a SMSF auditor, for some time because we have no way of knowing if our registration is being misused. I currently lodge an audit complete advice for every audit I complete, using eSat, and recommend this become compulsory. I would also advocate the advice be extended. As an example, if we qualify an audit, but a contravention report is not required, we have no way of knowing if the lodged annual return correctly notified the ATO. This could be easily added to the audit complete advice. Secondly, I would advocate a method of auditors being able to confirm lodgements, either by way of an ATO log-in or lodgement report supplied to us by the ATO on a regular basis. I understand privacy matters may need to be addresses, but if the information was limited to the SMSF’s name, ABN and the tax agent name (if applicable), that should be achievable.