The proposal, currently being considered by the ATO would require auditors to report every completed audit directly to the ATO to reduce the mis-use of audit numbers, according to SuperAuditors director Shelley Banton.
Speaking to SMSF Adviser, Ms Banton said the proposed requirement would be an inefficient approach to tackling the mis-use of auditor numbers.
“I’d hate to be sitting here doing an online eSAT report for every single audit we did,” she said.
“I would much prefer to receive a list from the ATO and cross reference that way because all I need to do is check it against the system and make a few queries.”
Ms Banton said while cross-checking against a list from the ATO would be a far more efficient process there are privacy laws the ATO is aware of “which has stopped the flow of information coming through to date”.
These privacy laws, she said, could be the reason the ATO is considering this proposal for auditors to report every audit instead.
The impact of this requirement on auditors will depend on the volume of audits being undertaken by the audit company, she added.
“If you’re only doing 20 audits, then you’ll be saying well that’s not a problem, but if you’re doing several hundred or a thousand, then you have to do an eSAT report for each one,” she said.
Ms Banton said it’s still unclear how complex the reporting would need to be.
“If you’re looking to get information from auditors you’re going to want as much information as you can,” she said.
“I can’t imagine it’s going to be less onerous than what we’re already doing.”
BDO Australia partner Shirley Schaefer told SMSF Adviser that more reporting by auditors direct to the ATO, if implemented, would improve the communication channel between auditors and the ATO.
“At the moment, the only other time an auditor is required to report to the ATO is when there’s an auditor contravention report,” she said.
“So I think you might find that there will be more direct reporting to the ATO by all auditors for all audits that they do and that will tighten up on that problem and process.”
Ms Schaefer said the ATO will likely continue to take a closer look at the tax agents putting auditor details on audits that haven’t been done.
Sledgehammer to crack a walnut. How many times does this happen out of 600,000 plus SMSF’s? Probably approx. 0.1% or thereabouts. Looks like it is building to a penalty regime in the not distant future. AS Ryan points out, in the past they have not cared too much about it, now they want to introduce more layers of red tape to combat what is in essence, a small problem. I am glad I did not go through the registration process to be an SMSF auditor. It can only get worse.
This is a serious issue need be be patch up asap. As mentioned, the ATO has issue with Privacy law which stop them from provide information but they can help to develop a system which can communicate with smsf audit software for this purpose. No auditor audit 100+ smsf without a software these day.
More work for SMSF auditors
I agree with Brian. Surely it can’t be that hard for the ATO to extract a list for each auditor number showing Fund Name, reported date of audit, yes/no answer to the qualification question.
A single email to each auditor on 30 June asking them to advise any discrepancies.
But, then again, there are plenty of other things the ATO should be able to do quite easily that are left to the poor old tax agent, so why should we expect this to be any different.
Auditors need to get over themselves.
If you are doing a small number of audits it is not a burden.
If you are going a significant number of audits then you should have the systems in place to quickly export a report / csv file with all relevant details which can be uploaded to the ATO for cross-referencing.
The integrity of the SMSF sector is something everyone is the industry is responsible for – accountants, auditors, advisers and the ATO.
This initiative is worth the effort.
The ATO can use the recorded auditor number to prepare a ‘client lodgement list’ similar to the tax agents lodgement pgm. Auditors can access their listing in real time and amend as required. The only added auditor reporting is to report fraudulent use of their number upon detection.
This needs to be recognised as an ATO issue not the auditors and the burden of administration is theirs.
As an auditor had the situation once where the client lodged the tax return, with my details on it, before I’d done the audit. This client was also a tax agent!
Called the ATO about what to do – they told me it wasn’t even worthy of a contravention report, and it wasn’t a mandatory SIS section so I couldn’t qualify on it.
ATO’s serious about this? I don’t think so based on my personal experience!