CPA Australia has called on the Government to drop its proposed three-year audit cycle for SMSFs.
In last year’s Budget the Government announced a policy where some SMSFs would be audited every three years instead of each year. Though each year would still be audited, so the audit was just postponed. The policy has been roundly criticised by professional bodies, and appears to be stalled.
“CPA Australia strongly recommends that the Government revisit its three-year SMSF audit cycle announcement from the previous Budget with a view to withdrawing the announcement,” says CPA Australia in its 2019/20 pre-Budget submission.
The stated purpose of the measure is to reduce the compliance burden on, and decrease costs for, SMSFs. However CPA Australia foresees that it could actually increase the cost of SMSF audits, as “audits every three years represent higher risk and therefore require more intensive work”.
Additionally longer periods between audits could result in contraventions becoming “more significant”.
Also, the change “may make it more difficult for SMSF auditors to meet current competency requirements to remain auditors, due to less SMSF audits being undertaken”.
These are similar to the concerns in the joint submission from CPA Australia and Chartered Accountants Australia and New Zealand when Treasury consulted on a discussion paper on the measure.
There has not been movement on the three-year audit cycle, at least publicly, since the Treasury consultation closed in August 2018.
Legislation to increase the maximum number of SMSF members from four to six, which was announced at the same time as the audit change, is already before the Parliament. There are few Parliamentary sitting days remaining before the expected calling of the election.
CPA is also calling for confidential external reviews of Budget measures before they are announced, pointing to the three-year SMSF audit cycle as an example. “If external experts across all sectors were consulted before the announcement, they could have quickly explained the negative implications of this policy proposal.”
“A common concern from stakeholders on tax and superannuation announcements on Budget night, is they often appear to have had little or no review by external experts before the announcement.”
“Such confidential expert reviews before a public announcement could lead to better policy outcomes and clearer announcements in the Budget papers.”