SMSF auditors in ATO’s ‘firing line’
The ATO’s new penalty powers, which came into effect last week, will have a direct impact on SMSF auditors, one audit firm has predicted.
A recent newsletter from SuperAuditors noted the ATO will be using SMSF annual returns and auditor contravention reports (ACRs) to apply a risk-based approach to assessing SMSFs with compliance breaches.
“They have further said that the failure of an SMSF auditor to lodge an ACR will result in the same or heavier penalties for the trustees than if no ACR was lodged,” SuperAuditors stated.
“In this respect, the ATO is expecting trustees to step up and take a professional approach in their role and responsibility as a trustee.
“SMSF auditors will also be in the firing line if they are found not doing the right thing as they can be reported to ASIC and their professional bodies.”
SuperAuditors said practitioners should also be wary about referring their SMSF clients to auditors who have a reputation for being an "easy auditor", as they may face potential PI claims from trustees as a result of the new penalty regime.
Speaking previously to SMSF Adviser, Heffron’s head of customer, Meg Heffron, said the new powers will change the relationship between SMSF trustees and auditors.
“In the past, if an auditor reported a breach, generally as long as it was rectified there was no further action, whereas now there could well be,” she said.
“There is a penalty to be paid [by trustees], so auditors are under more pressure to be absolutely certain of the breach before they report it,” she added.
Ms Heffron believes auditors have to be more “conscious” of their actions, adding that the days of reporting a breach without any certainty are over.
“[Auditors] will have to be confident they are right before they report a breach because trustees are going to be more concerned that it never gets that far,” she said.
“Trustees will now be asking, ‘How come you are reporting it as a breach? Are you absolutely sure?’ and the auditor who hasn’t done [their] homework will not be able to say, ‘Yes, I am absolutely sure’.”