Auditors warned scrutiny will continue: experts
It’s clear that the ATO and ASIC, in their role as co-regulators, are committed to the continual monitoring of SMSF auditors, says one of the sector’s leading educators.
Shelley Banton, head of education at ASF Audits, told SMSF Adviser that after a raft of actions against auditors this week by ASIC, it seems the regulators are stepping up their review of SMSF auditors.
This week ASIC took action against nine SMSF auditors after it “formed the view” that their conduct did not meet the required standards including concerns about compliance with auditing and assurance standards, independence requirements, registration conditions, or for not being a fit and proper person to remain an SMSF auditor.
“We should expect further activity directly from them,” Ms Banton said.
“The interesting detail about the most recent announcement is that the ATO referred 55 per cent of the referrals to ASIC and the other 45 per cent resulted directly from ASIC investigations.”
ASIC deputy chair Sarah Court said on Wednesday the regulator is taking more stringent actions to ensure compliance enforcement measures to preserve the fundamental integrity of the sector.
“SMSF auditors are responsible for auditing over 611,000 SMSFs with total estimated assets of almost $900 billion. In this privileged position, they play a key role in upholding the integrity and confidence of the SMSF sector. ASIC will continue to take action where conduct falls short,” Ms Court said.
Between 1 July 2023 and 30 September 2023, ASIC disqualified three SMSF auditors, cancelled the registrations of three more and imposed additional conditions on the registrations of five practitioners.
In the June quarter 2023, it took action against eight SMSF auditors, five of whom were disqualified and three had conditions imposed on their registrations.
Ms Banton said the sector will continue to see SMSF auditors who fail to meet their professional obligations targeted by the co-regulators to ensure the integrity of the super system.
Bryce Figot, special counsel for DBA Lawyers, said the latest action by ASIC is a “timely reminder” that there is in place a strong and active program of reviewing approved SMSF auditors.
“Subject to what ASIC and the ATO see they can pat you on the head or tap you on the shoulder, and essentially the ATO can close the file on an auditor or refer them on to ASIC,” Mr Figot said.
He said every auditor would be “well served” to look at the ATO website QC 4556, which outlines what is expected of SMSF auditors.
“It sets out in writing the minimum requirements for auditors and what the ATO wants to see in an auditor’s files. Auditors should be reading that to make sure they are up to date,” he said.
“The wording hasn’t really changed since 2022 but it is essential that auditors periodically look at it and make sure they are actively satisfying those requirements.”
