Auditor fee referral threshold set to be revised
The APES Board is planning to revise the 20 per cent threshold for auditor referral fees outlined in APES 110, said the SMSF Association.
Last year the Accounting Professional and Ethical Standards Board (APESB) issued draft amendments to fee provisions in the APES 110 Code of Ethics following concerns around auditor independence.
The amendments received a lot of backlash from various audit firms, which argued it was an arbitrary figure that would unfairly impact smaller and new firms.
Speaking at the SMSF Association National Conference, SMSF Association deputy chief executive Peter Burgess said the 20 per cent threshold is designed to mitigate or reduce the independence risk associated with auditors generating a significant amount of their income from one or a small number of clients.
“They talked about this 20 per cent rule so that if you’re getting more than 20 per cent of your fee come from one client, then you need to put in place safeguards to reduce the independence risk associated with that, and if you can’t mitigate that risk, then you need to refuse the engagement,” explained Mr Burgess.
However, following feedback from the SMSF Association and others in the industry, Mr Burgess said the APES Board are planning to make some revisions to the amendments.
“They’re looking to increase that 20 per cent threshold to 30 per cent, and they’re also looking to introduce a five-year transition period for new firms as well as existing firms,” he said.
“So existing firms will have five years from 1 January 2023 to monitor and plan.”
Mr Burgess said the SMSF Association intends to support the proposed revisions.
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.