Over 350 SMSF auditor registrations cancelled
ASIC has cancelled the registration of 374 SMSF auditors with outstanding annual statements.
In a recent update this week, the Australian Securities and Investments Commission (ASIC) stated it has cancelled the registration of 374 SMSF auditors who didn’t lodge their annual statements.
As part of its current compliance program, ASIC communicated to over 1,400 SMSF auditors that they had outstanding annual statements. Most of these auditors subsequently lodged their statements.
“Those SMSF auditors still with outstanding annual statements were advised on 3 August 2022 that ASIC was considering cancelling their registration,” ASIC stated.
“Notice of cancellation was sent to these auditors on 23 January 2023, following their continued non-compliance.”
Data obtained from the ATO indicated that these auditors had not performed a significant number of SMSF audits in the past two to three years.
ASIC noted SMSF auditors are required to complete and lodge their annual statement, otherwise they will risk cancellation of their registration.
ASIC also cancelled the registration of 10 SMSF auditors in June last year after they repeatedly failed to lodge annual statements.
SMSF Adviser previously reported that some SMSF auditors had intentionally stop lodging their annual statements in order to be removed from the system automatically and avoid paying the $899 exit fee.
The fee for cancelling an SMSF auditor registration was first imposed in 2018, with ASIC also imposing a $1,927 registration fee for SMSF auditors.
Speaking on the SMSF Adviser Show last year, Smarter SMSF chief executive Aaron Dunn said the failure of SMSF auditors to lodge annual statements was a “case of economics” rather than mischief.
“There are auditors who have thought, ‘well, I don’t see the need to pay. I can just not lodge and then I’ll be booted out of the system because I no longer have any interest being an SMSF auditor’,” Mr Dunn noted.
“The reality is that some of those registration cancellations aren’t a representation of them actually doing anything underhand; it’s simply just a case of economics and saying, ‘well, why do I need to pay nearly $1,000 to no longer be an SMSF auditor’.”
The exit fee for SMSF auditor registrations has been a significant gripe for the industry since its introduction, with the accounting bodies and SMSF Association all calling for its removal.
In October last year, Treasury released draft legislation which would significantly reduce the fee for applying for registration as an approved SMSF auditor to be cancelled from the current $899 fee down to $193.
This latest ASIC update follows the referral of 13 SMSF auditors by the ATO to ASIC during the period from July to 1 November last year as part of the ATO top 100 and high-risk auditor programs.
It also follows action that was taken by ASIC during the September quarter against six SMSF auditors due to breaches of obligations including auditing and assurance standards, independence requirements, and registration conditions, or because ASIC was satisfied the individual was not a fit and proper person to remain registered.
ASIC Commissioner Danielle Press said that SMSF auditors play a fundamental role in promoting confidence and instilling trust in the SMSF sector, which holds more than $865 billion in assets in over 600,000 funds.
“It is crucial that SMSF auditors comply with their regulatory obligations. ASIC will continue to take action where they do not meet these obligations,” the corporate regulator said.