In Self-managed super funds: A statistical overview 2011-12, released last week, the ATO indicated the number of auditors fell to 9,600, with auditors conducting an average of 40 audits each.
This drop in numbers was a deliberate outcome of auditor registration, Philip LaGreca, Multiport’s technical services director, told SMSF Adviser.
Auditor registration was a “clear mechanism” to ensure those who are auditing SMSFs are up to date with the SIS Act and superannuation legislation, he added.
“If you’ve got someone who’s looking at five funds per year, how much time are they going to realistically spend making sure they know what all the new rules are?” Mr La Greca said.
There was also a reduction in the average audit fees, with approximately 56 per cent of SMSFs paying less than $500 to approved auditors. Approximately 3 per cent paid $2,000 or more for the June 2012 year.
The most commonly reported contraventions by SMSF auditors were again loans or financial assistance to members, according to the ATO.
The drop in auditor registrations is not necessarily because of the small number of audits carried out. I did not apply (and I was performing audits on more than 30 funds per annum) because:
1. I didn’t need the fees;
2. I never particularly enjoyed the audit part of the work – I did it because accountants I knew and assisted wanted audits done by someone who knew superannuation.
3. Who wants the compliance costs and hassles? Certainly not me. There is more than enough with all the stuffing around by Govt and the regulatory bodies competing for work.
Although I am not involved in outsourcing , I understand most outsourced smsf operations are supervised by an Australian qualified and resident , Accordingly it is wrong not to acknowledge outsourced smsf services as increasing competition in the sector
There was recently an Administrative Appeals Tribunal hearing which is still unreported where the senior member ruled that the legislation for SMSF auditor registration did not allow for non residents to become registered. Thus competition from Manilla and India is no longer relevant for auditing and the cost of the audit should thus go up.
There is no way that a quality audit can be done for under $500. If a proper audit is not being done then lets get rid of this farce.
The only way to do an audit for $500 is to have the client prepare perfectly the accounts and work papers and then have a clerk check this and prepare standard audit documents for 2 hours at $100 per hour and then the registered auditor spends one hour at $300 doing the audit. This then requires the auditor to perform 6 audits a day times 5 days per week and 40 weeks per year or 1,200 audits. thus you number of 40 audits per auditor is thus too low.