One of the major issues of achieving a fully automated audit process is the fact everyone must have certification for their data, Mr Lesh told SMSF Adviser.
“We’re all relying on external feeds, so we’re relying on stuff coming from banks and brokers and all sorts of places, and unfortunately it’s just not that reliable,” he said.
Mr Lesh said while it possible to certify that the data from your own organisation is correct, it isn’t possible to certify that the data from other companies is correct.
“None of the banks have certification for their data and most of their systems have holes in them,” said Mr Lesh.
“We find error after error in the data feeds coming from the banks and other [firms].”
Mr Lesh said he therefore remains sceptical of the audit process ever being fully automated.
“I think we’ll see auditing that’s very close to being automated, but I don’t think we’re ever going to see fully automated auditing,” he said.
“I would like to see the banks and financial institutions have better and more reliable systems, that would make it easier for everyone,” he said.
However Mr Lesh said from his understanding data certification is not something any of the banks or larger organisations are working towards at the moment.
“I think that’s a huge problem going forward – [well] certainly at the moment,” he said.
I agree that SMSF audit is unlikely ever to be automated, but not for the reasons stated here.
An SMSF audit is about SIS compliance. Although it is technically also a “financial audit”, you dwell on it as if it is the only purpose.
The Cooper review recommended SMSF audits be replaced with an annual compliance certificate. Granted that existence and valuation of investments has become a concern due to the recession and financial fraud, that was never the Govt intent of an SMSF audit, and that is what Cooper recognised.
Whether your SMSF invests in a related party, or loans to a member or relative, acquires an asset from a member or hangs smsf artwork in the living room of the SMSF’s ski lodge, that is the intent of “audit” in this context.
The discussion here is one of SMSF administration and its financial accuracy, not one of SMSF audit.
John, I completely agree.
There should only be one auditor and that should be the ATO.
Having 2 auditors, both with incomplete data is inefficient expensive and stupid.
If the ATO can do Income Tax ok then it should be able to do an etax smsf tax ok.
An SMSF tax return should cost the same as an IT return – not 10X more!!
Incompetance at all levels…unless its intended as a hidden tax filtering money from the leaky Super bucket to the finace/leagal industry…?
..and dont get me going on ECT. You could make a film about it.
Good News,..Now the ATO are admitting you can reverse contribution mistakes and could always have done…when does the class action start?
I could not agree more. Further, audit involves assessment and judgement – these cannot be automated. There will always be some human input required. Hopefully, the hack work will be done by computers far more, but you are relying on inputs that may or may not be reliable.
I prepare the accounts for the auditor using Mr Lesh’s very good software. If I know a machine is going to interpret info one way, I am likely to make sure it presents the way I want it to. The machine will not be able to audit that and a human supervisor is going to have to be vigilant in interpreting what comes out of the box. The machine will be able to audit only so far.
I agree with Mr Lesh. As an auditor of smsfs for many years, it is always a concern when statements from banks and other financial institutions are incorrect or incomplete. While the process of capturing data and entering it into an accounting framework can move towards increased automation, there remains the need to review and verify the results generated. Improvements in the reliability of the underlying reports will assist in this process.
Tony Tassone, CA
Partner Lowe Lippmann Chartered Accountants
What utter crap.I have found Bank info spot on & as one only uses someone like Commsec for share trading & cash dealings can’t see a need for funds totally in the pension phase. In fact I would love to see the ATO start an E Tax alternative to remove a lot of leeches from the scene.