If you are a trustee of an SMSF then you should be well versed on the requirement to appoint an SMSF auditor no later than 45 days before the annual return is due to be lodged, but have you had the same auditor for years? Whilst familiarity with you and your fund may be a good thing, there are also some additional issues which should be considered. Registration with ASIC Is perhaps the most basic of requirements. When you retained your auditor you probably checked with ASIC to ensure that they were registered and had an SMSF audit number.
If you’ve had the same auditor for your fund for a number of years, when is the last time you checked whether their registration is still current? Continued registration with ASIC is dependent upon many things including the auditor completing relevant continuing professional development (CPD). Every year the ATO refers a number of SMSF auditors to ASIC for things such as CPD gaps, independence issues, and issues with the audits they have conducted. In serious cases, these SMSF auditors can be disqualified or suspended by ASIC. Auditor independence An SMSF auditor should not be auditing funds where they have a role or responsibility for preparing the account and financial statements. This issue particularly prevalent where the auditor is a sole practitioner with other staff. In such cases, there would be an independence issue if the staff who compile the accounts report directly to the sole practitioner who is also the auditor. Another threat to auditor independence is the relationship you have with the auditor. If you have a relative who is a qualified SMSF auditor and you ask him or her to audit your fund, this could raise significant concerns with the ATO about whether the independence requirements are met.
Low-cost auditors You may think that all SMSF auditors are the same and if you can save a few dollars on the audit and put that towards your retirement then why not? Well, the ATO has found evidence that some low-cost auditors had gaps in audit evidence, didn’t report identified contraventions, didn’t have a written audit plan, had limited or no use of checklists, and lacked key documentation such as trustee representation letters. It is in trustees’ best interests to have auditors who conduct the audit in a detailed and complete manner, so that if anything happens, another auditor should be able to just pick up the file and see how the work was done, including documentation that supports significant judgements. If you think there may be issues with your SMSF auditor, we can help you check.
