The software provider’s recent white paper, “Automation Nation: Why Tech is the Future of SMSFs”, noted that the increasing prevalence of robo-advice in the Australian investment market, coupled with recent legal cases that increased obligations on SMSF auditors, could present new challenges for auditors seeking to make a judgement on a trustee’s investments.
“Technology is set to streamline the way trustees seek advice — Canstar Australia already lists four automated services for self-directed investors,” Evolv said.
“While trends suggest it is largely millennials using these services, in time we can expect automated advice to spread. With it comes new auditing considerations like understanding algorithms, determining human liability for algorithm-generated advice, and reviewing liability agreements for companies that employ such technology.”
The firm said it was important for auditors to understand where liability lay for such advice, given the recent Ryan Wealth Holdings v Baumgartner case which found fault with an auditor for not flagging with the trustee that their adviser was not acting in their best interest in the investments they had recommended.
“While the role of the auditor is not to provide financial advice, this industry will nonetheless have a massive bearing on the way auditors conduct their work,” Evolv said.
“Look no further than the recent NSW court case of Ryan Wealth Holdings v Baumgartner, which saw the court rule against an auditor for not having passed judgement on a financial adviser’s conflicts of interest.”
The firm also predicted that a growing number of fund members would seek to move to SMSFs following the royal commission, but that such transitions would be easier for auditors to track than in the past following the introduction of SuperStream.
“The royal commission has seen a widespread trend in people reviewing their options and likely seeking a new provider. For those who make the shift to SMSFs, technology is going to play a massive role,” Evolv said.
“A recent ATO roundtable saw much discussion of SuperStream and the way technology has enabled different funds to effectively speak to one another. This kind of synthesis, as well as funds using shared architecture or software, will enable a much faster, safer and more compliant facilitation of fund transitions.”
My view is that the auditor should make sure that the AGM minutes contain a review of the strategy and all members have signed off on those minutes.
If an accountant is hung drawn and quartered for seeming to offer financial advice why would an auditor not be fulfilling his duty byusing a disclaimer such as “I am not qualified to offer Financial Advice however the Trustees would be wise to ensureby using trusted professionals that the investments in the Fund are designed for the members’ best interest.”
The first point to make is that the Baumgartner case was flawed. Secondly if a trustee can’t work out in whose interest the adviser is acting, they should’t be trustee. Sounds like the auditor now has to be a mind reader.
Why not? Always better to blame someone else. Especially if dollar signs are floating around.