What is the competition doing?
SMSF Adviser asked several prominent mid-tier and multi-service advice and accounting firms how they will be shaking up their auditing departments in the next five to 10 years.
Moore Stephens WA
The age-old question of price and value is a battle that audit professionals know too well, as is explaining the value of audit. As a firm, we have struggled with the tension between audit quality and price. While we have been working hard to bring the price down, made possible through the advent of technology and other factors, we have taken the decision not to compromise audit quality.
Our audit department acknowledges the price war is real as many SMSF members and trustees are price conscious and do not fully appreciate the need for an audit. Auditors and advisers need to ensure SMSF members and trustees are educated as to why fair presentation and compliance are important. Some reasons are:
- People need to be protected from themselves;
- An SMSF is not the right vehicle for everyone’s retirement savings;
- While an SMSF allows management of retirement savings by individuals, these savings still need to be protected;
- Tax deductions are allowed by the tax office for contributions to an SMSF. To qualify for the deductions, the rules must be followed; and
- The SMSF is there to provide funds to live off in retirement.
Auditing standards require the auditor to ensure the audit file contains sufficient, appropriate audit evidence to support the opinion. The auditor is required to form an opinion on:
- Whether the financial report, in all material respects, is fairly stated in accordance with the accounting policies described in the notes thereto; and
- Whether compliance with SIS and the regulations thereto has been achieved.
As a firm, we are continually looking to technology to provide more efficient ways of carrying out an audit. In our WA firm, our audit department has undergone various changes in the last two years, including:
- Employment of a dedicated resource to carry out SMSF audits;
- Implementation of software which seamlessly integrates with SMSF accounting software to pre-populate as much of the audit file as possible;
- Carrying forward permanent notes from year to year;
- Asking intelligent questions to build knowledge over multiple years in order to only audit the changes.
It is an exciting time in the audit profession. The changes we have seen demonstrate the endless possibility for the future. At Moore Stephens, we welcome the improvements and we see the next five to 10 years for our SMSF audit department:
- Possibly having an education series for SMSF members and trustees;
- Enhancing our systems to a point where data and information is provided by technology and the auditor touches the file at key areas in order to ensure all relevant risks are adequately addressed; and
- Possibly providing tools and reports via a website or client portal to SMSF members and trustees.
Grant Thornton Australia
Digital disruption has played a pivotal role in enabling us to achieve efficiencies through automation and outsourcing, freeing up our time to focus on delivering valuable insights to SMSFs by identifying levers that will enable growth.
For a number of years now, we’ve outsourced our SMSF audits to onshore specialist SMSF audit firms. This ensures we best maintain independence where we do the accounting and tax compliance for these SMSFs. We’re likely to continue this practice in the foreseeable future.
When it comes to keeping up with changes for the next five to 10 years, we’ve implemented the Class system, enabling us to achieve efficiencies though automation in our approach to our SMSF practice.
Some of the key benefits include technology that enables access to real time information. It also offers a centralised source for investment information, providing more assurance by adopting common routines. We also enjoy the efficiencies of its document repository, making it easier for us to securely share information with auditors. Finally, Class have ASAE3402 audit certification, which means our auditors can easily rely on system-wide integrity. Most importantly, these efficiencies allow us to spend more time on focusing on adding value to our clients.
Across our broader audit practice, Grant Thornton International is in the process of developing our third generation audit technology to roll out across the global network of firms. It includes methodology changes and a whole new approach to training all our auditors under a special project.
The technology within this special project will provide a state-of-the-art cloud-based system that will maximise automation, data extraction and analytics to drive efficiency to the process and ultimately deliver insights to clients and enhance their audit quality. At the same time, we’re in the process of piloting the use of an extended delivery model utilising our GT US firm’s existing shared services centre in Bangalore.
The integration with existing accounting software and automation of audit tasks is likely to have a significant impact on our business over the next few years. As accountants move to more direct data feeds, auditing will not just be a year-end process, but will occur at varied times during the year.
We would like to see software suppliers provide more system-based audits as a service to their customers. This will enable auditors to rely more on the system which will reduce time and therefore costs, although there will always be the need for some human input.
There will continue to be constant downward pressure on audit fees. At BDO, our focus is on providing added value to our clients through our knowledge and expertise.
Increased automation will reduce turnaround times on audits. Dedicated specialist SMSF auditors will be needed to meet demands as more audits are completed at the same time as other audit deadlines.
While offshoring is always on the agenda, it is likely that appropriate and efficient automation will have more of an impact on the way we deliver our services to clients.
Bentleys Tasmania has developed in-house automation solutions that eliminate the grit in performing SMSF audits. Our in-house automation solutions simplify the process of establishing an audit file, performing detailed analysis of SMSF activities, and generating audit reports, letters and documentation. This automation has helped Bentleys Tasmania consistently deliver a high quality audit, while keeping competitive pricing within the market.
Bentleys Tasmania will continue to develop the in-house SMSF audit solutions to improve process efficiencies and to maintain currency with the changing regulatory environment. We are also looking at adapting these processes to increase the automation in other areas of our audit practice, for example incorporate associations, trust accounts, private companies and AFSL audits.