ATO assistant commissioner Dana Fleming said that high-risk auditors continue to be a key compliance focus for the ATO.
The ATO, she said, uses data holdings, information from case reviews and intelligence provided from the public to try and identify poor processes and systems and intentional failure to comply.
It also looks at auditors with a high volume of audits but a low level of audit contravention reports, where those audits are out of sync with the rest of the population, and independence breaches, she explained.
“This year alone, we have referred 37 auditors to ASIC. In some cases, this has been where auditors have been providing both auditor and tax agent services to the same fund or administration services or accounting services,” Ms Fleming said.
“Where those instances do occur, we also refer them to the Tax Practitioners Board as well.”
Since the registration of SMSF auditors with ASIC commenced in 2013, she said, the ATO has reviewed a total of 715 auditors.
“Most of them we simply work with to educate them better about how they can meet their professional obligations, but where we do see that auditors have been deficient in their practices or not complying with their obligations, we refer them to ASIC,” Ms Fleming said.
“The most common reason for referral to ASIC is for independence breaches. These are, unfortunately, often for simple reasons such as auditing their own fund, auditing a relative’s fund, providing both auditor services and tax agent services to the same fund or accounting other administrative services, and more recently reciprocal auditing arrangements where two auditors agree to audit each other’s individual funds.”
Ms Fleming said that the number of auditors that the ATO has been referring to ASIC has increased over the last three years.
“Of the 715 auditors that we’ve reviewed, we’ve referred 96 to ASIC. I think that is a reflection of the SMSF industry and how hard it is for those SMSF auditors who may only have a handful of clients to keep up to date with their obligations of being an SMSF auditor,” she said.
“Over half of those referred auditors have had their registration cancelled, most of them voluntarily, which is consistent with the fact that they only had one or two left and were probably only doing them as a favour to those clients who’ve been long term, and really shouldn’t be doing it any longer.”
The comments outline its incredibly difficult for small SMSF clients of sole practitioners to be compliant. This is where technology & automation in the FinTech space can help SMSF customers with completing administration services or accounting services themselves in conjunction with accounting software that they would normally outsource to their advisors, to ensure they are doing the right thing. It’s becoming a necessary evil – to embrace the technology available to maintain utilising the services of accounting professionals to ensure the customer & the auditor remain complaint.
Did someone tell you this down the pub?
If you lose your professional independence as a SMSF auditor by providing accounting and taxation services to audit clients, there is not much hope for small SMSF clients of sole practitioners! If this is unacceptable to ASIC; why don’t they refer the Big 4 firms for lacking prima facie “independence” with their audits?
None of the big 4 accounting firms audit their own funds all are outsourced
However most second tier and multi partner firms do audit their funds that they provide advice to Caanz allows so called Chinese walls
Almost every accounting practice that I know breaches this rule….they set up ‘separate’ service entities where they audit the funds processed by the main accounting firm. They split up the funds between SMSF ‘auditors’ to ensure they maintain the minimum numbers required under the changes introduced a few years ago….
And these ‘ethical, trusted’ advisers keep saying they should be left out of rules that should only apply to planners….. This shows they are probably even more conflicted then the planners they denigrate as ‘sales people’ & ‘product pushers’….
There is a Royal Commission that proves you wrong about being conflicted and putting clients welfare first. I know of no reputable accounting firm that would audit their own funds. I suppose if I was a FP I might be tempted to be throwing out allegations in an attempt to make others bad as well, but then again, I probably wouldn’t.
Jimmy Really. Is that the best you can do.
You know this as a act do you.
Would you be one of those planners by any chance?
At least they are not stealing peoples money under the guise of providing services, or charging people exorbitant commissions for doing no work.
Before you start throwing around accusations you need to be very sure of your position and had better be squeaky clean yourself, as no one is perfect.