ASIC has announced that the registrations of 440 SMSF auditors have been cancelled, as they “did not undertake or pass a competency exam necessary to retain their registration.”
“Of the 440 auditors whose registration was cancelled, 373 did not attempt the exam and 67 did not pass the exam,” said ASIC.
Two SMSF auditors were also disqualified for overstating the number of SMSF audits they had performed in the 12 months prior to their application. People who had audited at least 20 SMSFs in the year prior to their application did not need to sit the competency exam.
Registering as an SMSF auditor
Registration as an SMSF auditor has a number of conditions, including residency, education and practical experience.
Auditors could apply to ASIC for registration from 31 January 2013, and there was a transition period in place, though this has now ended.
The speech, Update from the ATO on recent compliance activity, areas of concern with SMSFs and the ATOs future priorities, was given to the CPA Learn from the Masters SMSF Conference and Expo 2014.
SMSF Overseas Seminars
The ATO is concerned about promotors advertising “questionable SMSF conferences in overseas destinations”. It appears these seminars may be of limited value to the SMSF as they include “minimal training related to SMSF activities”. However the promotors claim the that the full costs of the trip can be claimed as a tax deduction. The ATO warns that:
“Trustees contemplating attending such events should be aware of the potential to contravene the sole purpose test.”
ASIC has received only 62 applications from accountants for limited AFSLs up to the end of May, 7,500 people have been registered as SMSF auditors and ASIC is concerned by advertising of SMSFs and property promotion.
These are some of the things to take from the speech, The Regulator’s Perspective on the Regulation of SMSFs, that the Commissioner of ASIC, Greg Tanzer, recently gave to the CPA Australia SMSF Conference 2014. Addressing the accounting body Tanzer said:
“We think that accountants and other gatekeepers have a critically important role to ensure that:
- at an individual level, only those investors for whom an SMSF is suitable go into the SMSF sector and, in doing so, they are fully informed, and
- at an aggregate level, the overall health of the SMSF sector is sound ”
Accountants Limited AFSL
Tanzer revealed a number of interesting statistics which show the lack of take-up of limited AFSLs by accountants, between 1 July 2013 and 27 May 2014:
- ASIC has received only 62 applications for limited AFSLs
- Only 27 limited AFSLs have been approved
- One application is likely to be refused
- 25 applications have been withdrawn or returned as they are “materially deficient in respect of the documentation and information which had been submitted in support of the application
The ATO has released version 7.0.0 of the eSAT electronic superannuation audit tool. The June 2014 release has been updated to allow lodgement of Auditor/Actuary Contravention Reports for the 2014 lodgement year.
This release also includes a new question R8.02B – Valuation of Assets, with the note:
“When preparing accounts and statements required by subsection 35B(1) of SISA, an asset must be valued at its market value”
What is eSAT?
First introduced in 2008 eSAT is an alternative to the paper form for auditors to lodge a contravention report. eSAT offers the following features:
- identify contraventions
- prepare, save and lodge Auditor Contravention Reports electronically
- revise Auditor Contravention Reports
- record notes and audit history
- access reference material
- review audit outcome
First required SMSF Annual Return?
Consistent with the ATOs announcement that “this year, we are focussing on newly registered SMSFs, encouraging on-time lodgment of their first return” the following has been added to the front page of the SMSF Annual Return 2014:
B: “Is this the first required return for a newly registered SMSF”
In the recently published speech to the SPAA national conference Alison Lendon, Acting Second ATO Commissioner, explained the ATOs SMSF compliance focus.
While acknowledging one of the roles of the ATO is to “ensure the health and security of this sector”, which Lendon thought was “in good shape”, the ATO does sometimes need to take “firmer actions”, such as those taken in 2012/13:
- 150 SMSFs were made non-complying
- 440 people were disqualified from being an SMSF trustee
- 513 enforceable undertakings were entered
- 70 funds were wound-up following audits
- 438 funds were removed from the Super Fund Lookup database pending investigation for illegal early release schemes
However the ATO “usually prefer[s] to work with trustees and their advisers to rectify contraventions wherever appropriate”.