Data feeds a ‘double-edged sword’, warns auditor
While automated data feeds have led to some substantial efficiency improvements with the processing of SMSFs, they are also causing significant headaches for auditors and potentially compromising the accuracy of client data.
SuperAuditors director Shelley Banton says there is a misconception by some in the SMSF industry that just because there are automated data feeds tracking the movements of the fund that auditors don’t need to verify this information is correct.
“You’ve still got to look at the data feeds and make sure they’re aren’t any gaps where the data feed has dropped out. You also need to look at the date the data feed was started because if there are any time frames within that year where the data feed isn’t in there in the platform, you’ll need to get bank statements to cover off on those particular periods,” Ms Banton said.
SMSF practitioners and auditors, she said, also need to check that the assets and bank account are correctly recorded in the name of the super fund.
“When the assets are set up, the accountants are just typing in the trustee names and the super fund names so unless you’ve got the June 30 bank statement in front of you, how do you know?” she said.
“Some accountants are pushing back on providing that 30 June bank statement because they think that just because it’s a data feed it’s OK.”
Ms Banton said SMSF professionals should also be checking that the data feed at June 30 matches with the balance on the bank statement.
It’s important that auditors have independent evidence in their audit file to make sure the data feed coming in is correct.
“I think there’s a misconception out there that just because the data feed is out there that everything is hunky dory and that’s not necessarily the case,” she said.
Ms Banton said there are other things auditors need to look at from an audit perspective in relation to data feeds that they didn’t have to look at before.
“I think data feeds are a bit of a double-edged sword for auditors at least,” she said.
“There may be less information that has to be provided by the client, but this doesn’t mean your obligations as an auditor are mitigated just because the client has a data feed.”
“You still need to follow process and audit steps to make sure that you can confirm and verify that everything that’s gone through an account in that year is true and correct.”
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.