The ATO has long been concerned that approved auditor numbers are being used in the SMSF lodgement process before an audit has taken place, and without the authority of the auditor.
The tax office’s research shows that in about 85 per cent of cases, this is down to administrative or “genuine” errors.
However, in about 15 per cent of cases, it’s clear the numbers are being used where an audit simply hasn’t and won’t take place.
Because this is an ongoing issue for the tax office, despite its ongoing compliance campaign, auditors will be emailed from March this year with lists of funds which have quoted their auditor number to encourage cross-checking.
Typically, auditor numbers are misquoted by a tax agent, and so far six agents have been referred to the Tax Practitioners Board (TPB).
Dana Fleming, ATO assistant commissioner for the SMSF segment, told SMSF Adviser that the tax office is considering other ways to prevent and police this behaviour in the long term, including new features in the tax agent portal.
Late last year, the ATO singled out 100 funds for investigation as a result of auditor number misuse.
“SMSF trustees or the responsible tax agent may face penalties or prosecution for deliberately making false or misleading statements to the commissioner when reporting an incorrect auditor number or lodging an SMSF annual return before an audit is complete,” the ATO warned at the time.
Registered tax agents are required to be honest and have integrity: a fit and proper person. Tax Agents deliberately misusing the auditor’s reference number don’t meet this fundamental requirement. Our system is based on Trust. Dishonesty has no place in the system. Such Agents should simply be struck-off. Once a few Agents lose their registration the message will hit home.
If this is a concern, how about the ATO comes up with a solution.
I have a few ideas to ensure basic compliance and cross reference checking.
Happy to assist.
For some years now I have been lodging the Audit Complete Advice to the ATO via the eSat software for every audit I have completed. I believe this lodgement should be made compulsory for every audit. Further, I believe this facility could be expanded to include notification to the ATO whether the audits had been qualified. Two additional boxes to mark for Financial and SIS qualifications. This would give the ATO the data to reconcile auditor references and to ensure that Q6 on each annual return was answered correctly, something we, as auditors, can never be certain of.
This is a really good idea. But also, make the eSat a cloud app so that is always up to date – it could be accessed through the new portal.
Long overdue