Powered by MOMENTUM MEDIA
subscribe to our newsletter

Gearing up your systems for auditor independence

Reporter
01 October 2020 — 2 minute read

Cloudoffis outlines some important considerations around updating systems and technology for easing the transition to the new auditor independence standards.

For firms looking to outsource their audit clients to an independent audit firm in response to the new guidance, what kind of considerations do they need to be making in terms of software and systems?

For firms that are currently doing audits in-house, the current workflow would be pretty easy: you do your work and email it over to your colleague or walk it over to them. Once they start working with a completely independent audit firm, there’s going to be a whole external workflow that will need to be managed. For example, theyre going to need to figure out how the external auditor wants the data documented and how the two firms are going to communicate queries and communication and how thats going to be set up. Thats a whole change management piece. The new auditor might have a completely different process and trying to bed that down is going to carry a lot of time and cost risk and involve a lot of back and forth.

Advertisement
Advertisement

Thats where technology plays a role in terms of integrations, automating processes, standardising the job and improving the management of queries and reviews. Everything is in the one place, which means you wont be spending as much time collating different things.

The other important aspect of the guidance is that theres going to be restrictions around how many funds are with a certain auditor, so instead of sending 200 funds to the one auditor, the likelihood is that theyre going to have to manage multiple auditors for those funds. So, that change process and all of those risks mentioned will be potentially doubled or tripled. So, there could be three different types of auditors, three different relationships and that could be three different change management pieces. If everyone is using the same software, thats one less process that you need to worry about because you know its automated and standardised. Technology can play a huge role in managing that.

For independent audit firms expecting to see a significant increase in client numbers, what do they need to think about in terms of increasing the efficiency of their firm and improving processes?

For independent firms, having the right systems in place offers scalability. If the estimates are true, 30 per cent or even 200,000 funds may be impacted by this change and will need to find a new auditor. Theres a huge opportunity for specialist audit firms to set up these types of processes and offer clients a smooth workflow. A big sell point for these firms is going to be making life easier during the transition, and thats going to be a big bonus for them if theyve got that automation and integrations set up already.

Do you have any general tips for SMSF firms in relation to managing the new independence standards?

I think the biggest tip is to start looking at it early on. As mentioned, if theres going to be a big portion of the market making the shift and even though it may seem like its 12 months away, theres a risk in waiting too long and not getting it done.

I think its also important to understand what possibilities are available in the market, whether thats outsourcing or technology, before deciding on a structure change for your firm. For example, technology ecosystems can help connect you with other firms, build new relationships and potentially find new or replacement business for your firm.

Gearing up your systems for auditor independence
businesswoman working smsf
smsfadviser logo
join the discussion

Latest poll

Do your clients plan to add additional members to their SMSF if the new six member limit is passed as law?

SUBSCRIBE TO THE
SMSF ADVISER BULLETIN

Get the latest news and opinions delivered to your inbox each morning

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.