SMSF auditor compliance program findings for 2016-2017
The ATO discusses its SMSF auditor compliance program findings for the 2016-2017 year. Craig Blair discusses the outcomes from the ATO’s focus on low cost auditors and sole practitioners who provide both tax advice or accounting services to SMSFs as well as the audit. He also identifies the ATO’s focus for 2017-2018, how the ATO is identifying high risk auditors, and highlights ways in which the ATO is seeking to work cooperatively with SMSF trustees and their auditors.
ATO's focus for 2016-17 SMSF Auditor Compliance Program
SMSF auditor independence
Under the Superannuation Industry (Supervision) Act 1993 (SISA), SMSFs must be audited annually by an approved SMSF auditor.
An approved SMSF auditor is a person registered with Australian Securities and Investments Commission (ASIC) under section 128B of the SISA. ASIC has responsibility for registering approved SMSF auditors and setting competency standards.
The Australian Taxation Office (ATO) is responsible for monitoring the conduct of SMSF auditors. The ATO may refer an auditor to ASIC for non-compliance, which may impose any necessary administrative outcomes. Legal requirements pertaining to the structure of a SMSF are contained in the relevant SISA and Superannuation Industry (Supervision) Regulations 1994 (SISR). These are summarised in GS 009 Auditing Self-Managed Superannuation Funds, paragraphs 11 and 12.
Registration of approved SMSF auditors
In order to be eligible to audit a SMSF, you must be registered as an approved SMSF auditor with ASIC.
ASIC Regulatory Guide 243 Registration of self-managed superannuation fund auditors (RG 243) sets out the requirements for registration, how to apply for registration and on-going obligations for approved SMSF auditors.
Registration applications are submitted online using ASIC Connect and registration requirements include:
In addition, ASIC must be satisfied that you are unlikely to contravene your obligations, are capable of performing your duties, are a fit and proper person and are not subject to a disqualification or suspension order.
ASIC maintains a register of approved SMSF auditors and a register of banned and disqualified SMSF auditors, under the SIS Act.
Competency requirements for SMSF auditors
Approved SMSF auditors must comply with the ASIC competency standards which are all contained in ASIC Class Order CO 12/1687 Competency standards for approved SMSF auditors. These competency standards are closely aligned with the Competency Requirements for Auditors of Self-Managed Superannuation Funds issued by the joint accounting bodies, with the exception of the competency for documentation which is unique to the ASIC competency standards.
The competency requirements for auditors of self-managed superannuation funds are mandatory for members of these professional accounting bodies wishing to audit SMSFs.
The SMSF auditor competency exam was developed by ASIC in consultation with industry. A recorded webinar is available to help members prepare for the competency exam. The webinar provides:
- practical information about the online exam, including how to register
- learning objectives for the exam
- references to further resources.
Obligations of approved SMSF auditors
The on-going obligations of approved SMSF auditors include:
- compliance with any conditions imposed on your registration
- undertaking continuing professional development
- complying with the ASIC Competency Standards and AUASB Standards, including Australian Auditing Standards and ASAE 3100 Compliance Engagements
- independence requirements in APES 110 Code of Ethics for Professional Accountants
- holding professional indemnity insurance
- lodging an annual statement with ASIC
- notifying ASIC of certain matters.
SMSF Auditor’s Report Form