Federal Budget 2018 proposal to move to a three-yearly audit cycle for some SMSFs
Thursday 17 May
CPA Australia has significant concerns regarding the potential impact of the announcement to move to a three-yearly audit cycle for some self-managed superannuation funds (SMFs), and on behalf of members it is raising these concerns with the Minister’s office, the Treasury and the ATO.
The stated policy intent of the measure is to reduce red tape for SMSF trustees. But in the absence of any further details at this time, no definitive judgment can be made in respect of whether this objective will be achieved, or indeed what the full impact of the measure may be.
CPA Australia is of the view that to ensure a sound basis to form their audit opinion SMSF auditors will still have to either conduct an audit for the three-year period or conduct three annual audits.
Material mistakes or contraventions identified may have existed for up to three or more years, and may result in greater administration and cost to rectify than if they had been identified in a timely manner. At best the proposed measure is a potential cost deferral – and that will most likely cost trustees more in the end.
The ATO has effectively outsourced a large part of the annual regulatory monitoring of SMSFs to the SMSF auditors. An annual independent audit ensures any contraventions are identified, reported and rectified in a timely manner, providing an incentive to trustees to operate within the law. Conversely, a longer audit period provides greater opportunity for potential abuse of the system and for greater gain. A three year audit period would also result in any contraventions, inadvertent or otherwise, being more costly and time-consuming for trustees to rectify, and may expose trustees to more severe regulatory penalties.
CPA Australia will actively participate in the proposed consultations and we are pursuing further details regarding the measure in the interim which will be shared with members as they become known.