Proposed new SMSF audit independence requirements come into place in mid-2021. At first glance, the new rules appear to result in a revenue loss for accounting firms. But take a closer look, and the benefits can really stack up.
The new SMSF audit independence requirements can work in a firm’s favour, allowing skilled personnel to be deployed to higher fee-generating areas of a practice, providing more productive use of resources, maximising the profitability of professional talent and allowing a firm to expand its team of trusted advisers.
The opportunity cost of SMSF audits
In the current business climate, accountants – like many businesses, are under pressure to do more with less. That makes profitability and productivity two factors to be mindful of in 2021. Both can benefit directly from the new SMSF audit independence requirements.
David Goldsmith CA, Business Development Manager at SMSF audit specialist firm Evolv, says the new independence requirements provide key opportunities for firms to deploy talent to higher fee generating areas of a practice.
He explains, “SMSF audits are usually a minor component of a firm’s practice revenue, that expose a general accounting practice to greater risk. Taking a closer look, in many cases partners and practice owners will find SMSF audits, completed in-house are a lower margin product. As SMSF audits often don’t fully utilise the skills of professional staff, this impacts on staff engagement and morale.”
Goldsmith goes a step further. He believes in-house SMSF audits can come with a significant exposure to litigation risk and opportunity cost – something no firm can afford to overlook.
“Having professional staff engaged in SMSF audits takes highly skilled personnel away from higher value work such as consulting and advisory engagements. These activities don’t just generate higher fees, they also nurture a far deeper client relationship than regulatory audits. This highlights the need to make the best use of the talent you have in place.”
Access to a wider pool of knowledge
As Goldsmith points out, “accountants tend to have transferrable skills that allow them to transition from audit to advisory work. When it comes to SMSF audits, firms can benefit in a variety of ways by engaging an independent SMSF audit specialist firm such as Evolv”.
“As a specialist SMSF audit provider, we help accountants tick the box for independence,” says Goldsmith. “The benefits of our independent service go beyond meeting compliance measures.”
“At Evolv, we complete thousands of SMSF audits annually. This means that we encounter a far wider variety of issues than a firm that undertakes a few dozen, or even several hundred, SMSF audits annually.”
“This enables our clients to tap into our extensive knowledge base and the specialist skills of our SMSF audit team. It supports Evolv being part of the group of trusted advisers that our clients rely on.”
Maintain cohesion and separation
Engaging an independent, specialist SMSF audit firm, like Evolv, delivers another benefit to accounting firms – overcoming the challenges and confrontations that can go hand-in-hand with auditing a firm’s own advice.
“An external SMSF audit firm eliminates the confrontation that can occur between specialist teams when a compliance issue is detected,” says Goldsmith.
“This potential for conflict between colleagues can see in-house audit teams reluctant to raise or address any issues. This can leave a firm vulnerable. It is far easier to discuss and resolve any compliance issues when they are raised by an independent third party. Quite simply, it eliminates internal arguments within a firm – supporting happy staff, a healthy client relationship, whilst more effectively managing product risk.”
To learn more about how Evolv can help your practice meet SMSF audit requirements, contact David Goldsmith at Evolv on dgoldsmith@evolvsuper.com.au or call 1300 886 536.
