With SMSF auditors now required to be registered with ASIC, the ATO can focus “hard and fast” on those offering auditor services and put their data matching capabilities into effect, Chartered Accountants Australia and New Zealand’s head of superannuation, Liz Westover, told SMSF Adviser.
“For example, if an annual return is lodged and someone is down as the auditor and they’re down as the tax agent as well, it’s now much easier for the tax office to be able to say, ‘hang on, this might be a problem’,” she said.
“That’s one of the more positive outcomes I think of the registration process: they can hone in on these particular issues.”
The ATO also now has the power to refer registered auditors to other government bodies where appropriate, including ASIC and the Tax Practitioners Board (TPB).
If a problem with an auditor was identified and the ATO notified the TPB, for example, the TPB could assess whether it was appropriate for that practitioner to be a licensed tax agent.
In addition, if an auditor has their registration disqualified, it may impact their ability to be an SMSF trustee.
“[The ATO] want to make sure people take their responsibilities as trustees seriously,” Ms Westover said. “If you can’t do it as an auditor, how can you be trusted to uphold your responsibilities as an SMSF trustee as well?”
Ms Westover stressed that while rogue behaviour is by no means commonplace, it is pertinent to warn auditors of the implications of their behaviour.
“If you think you can fly under the radar, you really are running a huge risk now because the data matching capabilities of the tax office are becoming so sophisticated,” Ms Westover said.
Liz
You make very good comments here, but the reality is altogether different.
There are almost 600,000 funds but no work for independent 3,000 ASIC approved SMSF auditors.
3,000 auditors are not even looking for work as they are partners in an accounting firm which has 2 or 3 partners and all their work comes from the accounting firm. They do not audit any fund where the firm is not responsible for administration of the fund. 60,000 (about 10%) funds with large to medium administrators who give jobs at wholesale prices.
The problem is RG 243 points towards APES 110 for independence issues. APES 110 says many things – i doubt many ASIC approved auditors has read this document, because if they had, they would not be auditing their own firms SMSF’s.
The monitoring of the Chinese walls in APES 110 has been handed over to professional bodies and whosoever I know has never been contacted by their professional body.
How has SMSF auditor registration changed anything? The ATO has decreed for about the last ten years that they consider that if the tax agent and fund auditor are the same person there is a conflict of interest. They have had the ability to get this information straight from the annual return lodged directly with them. So how will getting information about auditor registration from ASIC make it harder for accountants who try to fill these dual roles?
This issue is not news. The ATO have had this capability for many years, but probably lacked the resources and the incentives to fully apply it