I recently represented CaseWare, along with CEO Craig Waldon, at the CAANZ Accounting and Audit Conference in Perth. It was a great event, and I enjoyed catching up with many of our fantastic WA customers.
I also had the opportunity to attend a session titled “From the regulator’s perspective – auditing in 2016” in which Matina Moffitt from Ernst Young interviewed Howard Dickinson from the Australian Taxation Office (‘ATO’) on what Auditors need to be mindful of this year, and I learnt both exciting and scary things about our industry.
Firstly for the good stuff – here are some of the positive SMSF statistics that Howard presented:
- There are now approximately 557,000 SMSFs with 1 million members in Australia
- These SMSFs hold $590 billion in assets
- More than 30,000 SMSFs are now being created annually
So the SMSF industry is booming!
But then the conversation turned to the ATO’s issues of concern, and I was shocked to hear that there are still people auditing their own fund. And what is even more shocking is that they don’t see the issue with it. I can’t think of a single safeguard that would mitigate the self-interest and self-review threats to independence here – can you? Howard went on to say that people have also been found auditing the funds of relatives and business partners, which would constitute a familiarity threat in my mind.
So what is the ATO doing about this? They are stepping up their reviews. As well as the independence issues above, the ATO will be focussing on:
- Quality of audit documentation
- Auditors’ knowledge and understanding of SISA and SISR
- Failure to report contraventions (read more about the ATO’ issues of concern by clicking here).
Matina and Howard also discussed some of the changes in the audit environment over recent years – here is my summary of their discussion:
- low cost audits are a concern
- a testing process is being set up to identify these low cost audits for review
- The ATO has no issue with automation – “We see it as the future”
- Automation will help with consistency and will drive improvements
- Outsourcing / offshoring
- Whist this process is appropriate, the audit can’t be entirely outsourced
- The Australian-based auditor signing off on the audit must ensure it has been performed correctly and to a high quality
I really enjoyed the session, and I look forward to hearing what is discussed in sessions like this in the years to come. With the emergence of smart audit solutions like CaseWare SMSF Audit that promote quality and compliant auditing, let’s hope we are talking about the initiatives of providers and auditors to further enhance the audit experience, outcomes and ultimately the value of the audit to SMSF members.
Product Manager – SMSF Audit
- Accounting & Audit: Automation – How Much is Too Much? - 8 March 2018
- Another conference, another presentation on independence - 19 October 2016
- ATO’s Issues of Concern are… concerning! - 5 July 2016