It is “no longer acceptable” for auditors to be receiving client information months after transactions have occurred, said chief executive of Engage Super Audits Jo Heighway at a SPAA state chapter event in Sydney last week.
“That means effectively our advice is almost way too late to even be relevant to anybody. Real-time information is what everyone wants,” Ms Heighway said.
“This is my vision: as trustees are spending their money, as they are buying those investments, why can we not be auditing those transactions at that moment as well? And if something is going awry, we flash up and we say there’s something wrong, here’s the references or here’s the information that you need from a compliance point of view.
“At the end of the day, we need to remember our goal is education not fining, not penalties, not getting trustees disqualified; we want them successfully saving for their retirement and we want the SMSF sector to be operating as efficiently as possible. So it is absolutely not efficient for auditors to be looking at transactions two years after they’ve occurred.”
Referencing comments made by Smithink’s founding director David Smith, Ms Heighway said she believes a fully automated SMSF audit process is feasible.
“I believe it’s entirely possible to fully automate the audit process, including auditor judgement, because I think it’s very possible to program the rules around judgement and eliminate inconsistent auditor opinions.”
My dear GeorgeVC, perhaps I live in a glass house but my head is in the right place. The man who audits my clients’ funds checks the tax return and you know what? He even checks the deed and rules to make sure they are up to date and compliant, he checks to see if the fund paid the minimum pension to pension recipients etc. etc. I could go on. The point is that he does a proper audit. If some others don’t I suggest they are changed.
[quote name=”George Lawrence”]This is laughable! What happens at year end? And what about the tax return audit? And the prudential audit? I am not an auditor, I am an accountant helping SMSFs meet their compliance requirements.[/quote]
Sorry mate, but if you think the auditor checks the tax return for you, well, people in glass houses……
The proliferation of cheap smsf administration with little or no focus or understanding of smsf compliance, makes the auditors role in identifying compliance issues even more important.
If the cheap smsf admin providers (here or in some 3rd world country) are not keeping a watching brief through the year, then someone needs to.
From that perspective, i think Jo’s idea has substantial merit.
On the other hand, if you call your self any decent form of smsf administrator or accountant, compliance problems should never be left to the auditor to detect.
They should be identified during the year or during reporting, addressed with the trustees, rectified or a plan of rectification put in place, and all that served up to the auditor on a platter.
Then the auditor can report to the ATO if necessary, noting the rectification action already taken. Generally that keeps the ATO satisfied.
I applaud Jo for having the guts to stand up and make an effort to drive the profession forward.
On the admin side we have a daily processing team and it is amazing the things they pick up – typically innocent mistakes like making a bpay from the SMSF account by accident, but on rare occasions more sinister items like early release or a less than ideal investment.
I don’t think the focus is on zero-risk transactions like contributions, share purchases or pension payments – the focus is on the exceptions. We’ve worked hard to automate the generic stuff which makes the exceptions mentioned above stand out.
Independent auditors should be part of the management of the fund – they are an essential part of keeping the SMSF industry healthy. We speak to our auditors weekly about client issues and it makes a huge difference in the outcomes for our clients.
Keep stirring things up Jo – a few years from now the naysayers will be thanking you for it!
Year end isn’t forgotten in real-time auditing of course! Year end happens in real time too.
Here is a great link to explain where auditing is heading…
Bill Titera The Future of Auditing
https://www.youtube.com/watch?…
Sounds more like getting involved in the management of the fund to me.
What is proposed makes little sense. My practice reviews SMSFs quarterly & thus can keep on top of issues.
To suggest the trustees want real time comments is wrong. Banking contributions, buying shares, making or a monthly pension payment are not worth real time. In fact, I argue they don’t even make audit sense.
Mind you, the value of a SMSF audit is so low that for us to be relevant something has to be done
We can check the portfolio to the investment straty
So if you are auditing 50 funds you are going to double check every transaction every fund makes during the year? I cant see many trustees wanting to let the auditor access all of their accounts in real time.
Not feasible, an overreaction.
This is laughable! What happens at year end? And what about the tax return audit? And the prudential audit? I am not an auditor, I am an accountant helping SMSFs meet their compliance requirements.