Speaking at a recent conference, ATO assistant, SMSF risk and strategy Justin Micale said the ATO is currently working with ASIC to reshape the approach of its compliance program for SMSF auditors to be become “more real-time and differentiated”.
“We are looking to increase our coverage and introduce a broader range of treatments to address risks within the industry,” said Mr Micale.
“This program of work is expected to deliver a higher rate of referral to ASIC in the coming financial year and, as a result, increased visibility on how both agencies are working effectively as co-regulators to address inappropriate auditor behaviours.”
Mr Micale said the ATO’s compliance program will continue to use data and intelligence to risk assess and deal with higher risk audit firms.
It will also continue to focus on issues such as audit adequacy, in-house audits and reciprocal auditing arrangements.
Mr Micale noted some of the joint work undertaken by the ATO and ASIC last financial year within the SMSF audit space.
In March this year, ASIC announced that the ATO had referred 18 SMSF auditors to ASIC who were involved in reciprocal audit arrangements. Each of the reciprocal audit arrangements involved two SMSF auditors who audited each other’s personal SMSFs.
ASIC accepted voluntary cancellation requests from nine of the SMSF auditors and imposed additional conditions on the registration of the other nine.
In April this year, ASIC stated that in addition to the compliance action taken against the 18 auditors involved in reciprocal auditing arrangements, it had acted against a further 19 SMSF auditors.
ASIC deregistered 12 SMSF auditors and imposed additional conditions on the registration of seven others.
The actions resulted from breaches of obligations including auditing and assurance standards, independence requirements, and registration conditions or because ASIC was satisfied the individual was not a fit and proper person to remain registered.
Thirteen of the 19 auditors were referred to ASIC by the ATO.
Some of the common issues identified in auditor reviews undertaken by the ATO include issues such as failing to obtain sufficient appropriate audit evidence, inadequate evaluation of the audit evidence; and inappropriate documentation to support the conclusions reached, said Mr Micale.
“Documentation of an SMSF audit is necessary to determine that the audit has been properly conducted. This is the case even if there were no contraventions,” he said.
