SMSF sector fears compliance quality compromised by Federal Government’s triennial audit proposal
SMSF professionals fear the quality of compliance is threatened by the Federal Government’s proposal for three-year audits on funds.
“Auditors and accountants involved in SMSFs are telling us that less audits is not the same as less redtape and will create more problems in the long run,” says SuperConcepts CEO Natasha Fenech.
“There is a lot of redtape in the SMSF sector but the problem isn’t with auditing. We feel the Government could be more effective in looking at the steps taken by professionals to verify the financial audit and compliance issues.
“It’s not really appropriate that compliance checks are removed under the current proposal, because things can go wrong if they’re not reviewed regularly. From our experience, the sooner problems are identified the easier they are to fix.
“We strongly believe there needs to be more regular audits rather than less, and technology is rapidly enabling a real-time process for that to happen,” says Ms Fenech.
Less Audits by SMSF Professionals creates potential burden for ATO
“While the ATO will continue managing the risk of tax and regulatory breaches, this could be made more difficult by the Government’s 3-year audit proposal,” says SuperConcepts CEO Natasha Fenech.
“We are likely to see more breaches being reported to the ATO as issues that might have once been dealt with quickly and easily during the annual audit now won’t be addressed in a timely manner.
“The consequences are that it develops into a significant reportable event, which then requires ATO resources to assess and action,” says Ms Fenech.
Eligibility issues spotlighted by professionals
The Federal Government’s proposal that eligibility for 3-year audits be done by self-assessment is doomed to fail despite the apparent safe guards.
SMSF Trustees who have received an Audit Contravention Report in the past 3 years would be automatically ineligible for the proposed 3 year audit cycle.
But professionals say an ACR is not the only consideration.
“The question of eligibility is being hotly debated among our partners, with Tax Agents telling us that only 30 per cent would be eligible,” says SuperConcepts CEO Natasha Fenech. “That’s a lot of work that is likely to add costs to the trustees.
“There might not be an ACR issued but many funds are still issued with management letters by their auditors, which the ATO never hears about and would assume the fund is ok.
SMSF professionals believe that a move to a three-yearly cycle means that these issues would go undetected for longer and ultimately lead to an ACR for trustees.
“It's not as simple as whether an ACR has been issued when regular touchpoints with SMSF professionals reveal problems before they bubble to the surface,” says Ms Fenech.
“Real-time compliance and efficient continuous audits will help SMSF Trustees and Administrators keep easier tabs on the health and compliance of their fund, and the tech sector is increasingly making this possible,” says Ms Fenech.
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