ATO refers more SMSF auditors to ASIC than in whole of prior year

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The ATO has already referred more SMSF auditors to ASIC in 2017/18 then it did in the whole of 2016/17.

James O’Halloran, ATO Deputy Commissioner for Superannuation, said that the ATO had so far referred 30 SMSF auditors to ASIC over concerns in 2017/18, compared to 22 in 2016/17.

“These results perhaps reflect our increased focus on auditor assurance and have been built on again this year as we focussed on high-risk areas such as auditors who appear to be auditing funds where they have had a role or responsibility for preparing the accounts and financial statements, low-cost auditors, auditors who appear to be auditing relative’s funds and similar actions,” Mr O’Halloran told the SMSF Association National Conference 2018.

“Some 24 of the 30 auditors referred had issues identified relating to insufficient evidence, and 22 of those 24 also had independence issues,” he said.

“By way of background, we had earlier contacted some auditors with our concerns because they appeared to also be involved in preparing the accounts and financial statements of funds they audited.”

O’Halloran said the ATO has been conducting ‘full audits’ of these SMSF auditors.

He said generally the auditors were the sole registered auditor in the business, but often had staff. Typically the staff prepare the accounts and financial statements and they are signed off by the auditor or another senior staff member.

“In our view this still creates an independence issue because the staff report directly to the auditor who is the sole practitioner,” said Mr O’Halloran.

“Additionally, in all our audit cases we’ve started looking at compliance with CPD requirements and found some gaps there as well which we are highlighting to ASIC.”

“So, further to increasing our assurance reach to more auditors, this year we are visiting approximately 300 auditors who we have assessed as having an indicator of risk. These visits will be used to either gain an overall level of assurance that their processes and practices are appropriate or identify issues or gaps that need to be addressed.”

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