ATO explains SMSF auditor monitoring strategy
ATO assistant commissioner Matthew Bambrick has explained the processes the ATO will be using to keep an eye on SMSF auditors and the auditing process in the 2014/2015 financial year.
Speaking to SMSF Adviser, Mr Bambrick said the ATO’s compliance program for SMSF auditors will include auditors who perform a relatively large number of audits with what appears to be an inadequate number of staff.
In addition, the ATO will be monitoring those who lodge no or a low number of auditor contravention reports with the ATO.
“In this situation, there may be an issue with the auditor not conducting the audit completely and in accordance with auditing and competency standards,” Mr Bambrick said.
He noted that every SMSF’s annual return is required to report who audited the fund, including the SMSF auditor number.
“This can also identify trends or patterns in relation to particular auditors. The auditor information collected from the SMSF annual return can be used to identify where there are increases and decreases in audits being conducted by particular auditors,” Mr Bambrick said.
“This information also assists us identify trends within the industry which may point to risks for the ATO to target in our SMSF auditor compliance program."
Outside the SMSF auditor compliance program, the ATO also engages with auditors through an increased presence and activity in social media, interactive webinars and presentations at industry conferences, Mr Bambrick said.
“[This] assists in keeping us aware of issues faced by the SMSF auditor industry more generally and providing assistance where required."
Each auditor contravention report received by the ATO will lead to the SMSF being risk rated on the basis of the information in the report and other information, with funds receiving a high rating being audited, Mr Bambrick added.
If an SMSF auditor is found to be doing something wrong, the ATO has the power to report them to ASIC.
However, as Chartered Accountants Australia and New Zealand’s head of superannuation, Liz Westover, told SMSF Adviser, the ATO generally looks to work with professionals before referral to ASIC.
“It’s not going to be a minor issue that is going to cause an immediate referral to ASIC; that’s not the intention and that’s not likely to happen,” Ms Westover said.
“I think the tax office will be engaging with the auditors to find out what’s really going on and then, where there is a serious breach, or there is repetitive behaviour or an unwillingness to cooperate and do the right thing, those are the people that can expect to be referred to ASIC.”