Three-yearly audits won’t produce savings

Amid continued debate over the worth of the Government’s triennial auditing proposal for self-managed superannuation funds (SMSFs), the SMSF Association has warned that the change would not produce significant cost savings for trustees.

A survey of Association members found that 86 per cent believed that three-yearly audits would not reduce costs and 84 per cent said they would recommend their clients continue having annual audits regardless of the proposal. Unsurprisingly given these results, 89 per cent said they opposed triennial audits.

“Our analysis leads us to believe that the costs and complexity of creating and implementing the proposed triennial audit for eligible SMSFs would outweigh the benefits provided to the SMSF sector, as well as pose potential integrity risks,” SMSF Association chief executive, John Maroney, said.

“We believe any cost reductions for SMSFs trustees would not be substantial and would not justify the increased complexity and potential integrity risks for individual SMSFs as well as the broader sector.”

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Maroney said that members were aware that triennial audits could lead to auditors and trustees becoming unfamiliar with the fund, adding further complexity to the audits.

The Association had previously told the Treasury, in its submission regarding the proposal, that the change would impact SMSF audit businesses and may reduce the quality of the audit workforce, which could affect the quality of independent oversight of the SMSF sector.

It also expressed concern to Treasury that the eligibility criteria for triennial audits, which would involve “triggers” for annual audits for some funds, could actually make the SMSF compliance system more complicated, outweighing any red tape reduced by the proposal.