Auditors warned on critical obligation with threatening behavior
SMSF auditors have been reminded of one of the lesser known obligations of the SIS Act requiring them to report clients who attempt to coerce or manipulate, as failure to do so could even lead to jail time.
Speaking in a recent webinar, DBA Lawyers special counsel Bryce Figot said very few SMSF professionals and auditors are aware of Section 130 BA of the SIS Act.
This obligation requires SMSF auditors to report to the regulator where a client attempts to unduly influence, coerce or manipulate them or a member of their team conducting the audit or any attempt to interfere with the proper conduct of the audit, he explained.
If the SMSF auditor becomes aware of this kind of behaviour they are required to notify the regulator in writing within 28 days, he said.
If an auditor fails to notify the regulator, they have technically committed an offence, Mr Figot warned, the penalty for which is 50 penalty units or even 12 months in prison.
This obligation means that if an auditor notifies the client that they are going to lodge an auditor contravention report and the client becomes defensive and threatens to take certain actions against the auditor, the client has then imposed an obligation on the auditor to report them within 28 days, he explained.
“Often we’ll get engaged with auditors and we see the correspondence that people have sent and some of it’s quite threatening correspondence,” said Mr Figot.
“My guess is that every auditor at one point or another will have been threatened in one way or another, perhaps not physically threatened but they will have come under attempts to unduly influence, coerce or manipulate the auditor. I think a lot of people aren’t aware of this obligation when that happens.”
Miranda Brownlee
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 also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
