ATO turn the spotlight to SMSF auditor independence

Independence is fundamental to every audit.

The independence of the SMSF auditor is crucial in the process of building trust, confidence and stability in the capital markets. The ATO has released new guidance on the APESB Independence Guide which further clarifies what firms need to do to overcome independence hurdles and its compliance approach for 2020–21 and beyond.

The guide has a specific chapter on Self-Managed Superannuation Funds (SMSF’s) and applies the principles in the code when accounting and bookkeeping services are provided to an audit client. As a significant part of the regulatory framework for self-managed funds, it is important that the audit is performed independently of the financial statement preparation. The ATO noted that the guide also explores other scenarios that auditors should look at to ensure they are not breaching the independence standards in the restructured code. Some of these include:

• the books / records being prepared by the auditor;
• the accounting firm acting as a registered tax agent and auditor; and
• auditors who audit an SMSF where the auditor was previously a consultant, partner or employee of the firm.

For firms which are unable to specialise in SMSF audits, there are real challenges in providing audit services in a truly independent manner.  As a best practice approach, it is recommended accounting firms consider the segregation of roles within the firm and outsource the audit function where appropriate.

The ATO is now monitoring SMSF audit firms to ensure compliance with APES 110.

Australian Independent Audit Services provide independent audit services with a personal approach. We currently service a number of accounting practices in undertaking their SMSF audits and welcome the opportunity to discuss how we can assist you and your team. Please refer to our website for details of our approach – www.independentaudit.com.au

If you would like to discuss the implications of the new independent guides and how we can assist, please contact our office on 08 8333 7333.