Would you pass the test on SMSF audit independence?

Having announced repeatedly that they would crack down on SMSF audit independence, the ATO has actively been assessing, reviewing and auditing SMSF auditors and audit arrangements, with a focus on the issue of genuine independence. Auditors who do not live up to the highest standard of audit independence are being referred to ASIC and/or asked to relinquish their SMSF audit portfolio.

Independence rules are black and white
It is crucial that all SMSF auditors and accountants are complying with ATO regulations.

Auditors cannot be a trustee or member of a fund they audit. Auditors cannot also be the person who prepared the SMSF accounts. In sole-practitioner situations, where the staff prepare the financial statements and either the auditor or a senior staff member sign off on them, the ATO’s view is that this creates an independence issue because the staff report directly to a sole-practitioner auditor. Moreover, addressing issues with clients can be difficult when funds do not comply.

Benefits of a truly independent audit:
Real independence provides key benefits to the accounting firm preparing the accounts:

• Keeping at arms’ length from the audit process allows the accounting firm to work with the auditor to identify compliance issues and also with the client to address compliance issues without straining the client relationship.
• Independence improves long-term compliance of SMSFs, as trustees are provided with frank and honest feedback. This reduces risk for accounting firms and also provides peace of mind through knowing that the funds have been thoroughly scrutinised.

Do you know where to turn?
If you need to review your SMSF audit arrangements, SaulSMSF offers a quality solution that is 100% Australian and genuinely independent. We maintain and respect the relationship that accounting firms have with their SMSF client. Protect your relationships with your valued SMSF clients by doing the right thing.

Call 1300 551 261 for more information.

Kind regards,