The recent the Australian Taxation Office (ATO’s) update of its approved self-managed super fund (SMSF) auditors has sent a warning to advisers, indicating that the importance and value of engaging a ‘good’ auditor is often underestimated and is not seen as an opportunity for an SMSF compliance according to DBA Lawyers.
Further to that, a thorough audit could help increase the likelihood of early detection of a contravention of superannuation legislation which could, as a result, minimise any adverse consequences.
Therefore, ATO examined a number of aspects of the auditor’s role when conducting an audit and urged advisers to be put more emphasis on some of the key criteria when engaging with an SMSF auditor.
The key criteria on which advisers should particularly focused were independence of an auditor, choosing a ‘fit and proper person’ for this role as well as insurance and ongoing training.
DBA Lawyers warned that lack of independence could cloud an auditor’s judgement and cause non-compliance to go undetected or ignored to the detriment of the SMSF while advisers should not take a ‘one size fits all’ approach to engaging an SMSF auditor for their SMSF clients but should assess each engagement on a case by case basis.
Both ATO and the Australian Securities and Investments Commission (ASIC) included a number of factors to determine if an auditor was a fit and proper person, including a person’s character and reputation, qualities of honesty and knowledge, ability to perform duties properly, among others, it said.
On top of that, advisers should also consider the amount of insurance cover that an auditor has in view of the value of their SMSFs.
“SMSF auditors are also being more closely monitored by the ATO and ASIC to ensure they are appropriately discharging their obligations,” DBA Lawyers said.
“SMSF auditors have many obligations that must be satisfied including, where necessary, lodging an auditor contravention report which may lead to further scrutiny of an Adviser’s SMSF client.”