Action item update
- Review of Regulation 4.09A breaches – Technical discussion continues to progress and we are expecting that November meeting will provide the opportunity for further discussion.
- Review of Market Valuations guidelines and auditor requirements – We have tweaked some aspects of the wording of the current web content which specifically relates to the role of auditors and when independent market valuations should be sought. We circulated the document to members for feedback on these proposed changes with feedback due by 26 August 2022.
- Review of Auditor Contravention Reports (ACRs) –This relates to the $30,000 financial threshold test for reporting of ACRs. We have commenced a review which is looking at audit and fund behaviour and reported contraventions. Scoping is underway and we expect the preliminary findings and our thoughts around options to be presented at the next meeting.
Member feedback updates
SuperStream web content
Based on member feedback to the proposed draft content, updates have been made and the final version is expected to be published on the ATO website in the coming weeks.
Post meeting update – Web content was published on 5 September at SuperStream SMSF rollovers and auditor reporting obligations.
SMSF auditors communications survey
Based on member feedback, a final version of the auditor communications survey is being progressed and is expected to issue to all SMSF auditors from mid to late September. We expect to provide summary details of the survey results at the November meeting.
Top 100 Auditor Program
A presentation on the outcomes of the ATO’s Top 100 Auditor Program was provided and highlighted the following key points.
- The majority of Top 100 SMSF auditors use computerised systems and have adequate systems, processes and controls to allow them to appropriately sign off on large numbers of audits annually.
- This increased confidence, allows us to treat any residual risk under the general risk categories for the whole approved SMSF auditor population.
- Some areas of audit practices have emerged as potential areas of improvement including
- ensuring staff are provided with regular and comprehensive training
- having detailed audit procedures with effective quality control (evidenced by appropriate audit trails/notes)
- not just relying on audit software and data feeds, appropriate audit testings needed to be conducted.
- ATO SMSF Auditors Compliance Plan for the 2023 financial year
- The ATO presented a high-level overview of its SMSF Auditor Compliance Plan for the 2022–2023 financial year.
The ATO’s compliance approach for the year will again be balanced in a way which aims to support the whole population of SMSF auditors as well as identifying and dealing with high risk audit behaviours.
Stakeholder engagement will continue to be a key aspect of our program and in particular via the SMSF Auditors Professional Association Stakeholder Group.
Upcoming guidance material and engagement activities for auditors includes:
- SuperStream web content
- Guidance on Cryptocurrency
- Guidance on the application of Regulation 4.09A
- SMSF auditor communications survey.
There will be the opportunity for us to engage and seek feedback on the material being developed on these topics.
Our co-regulatory role is extremely important and we will look to strengthen the relationship and compliance approach to SMSF auditors with ASIC this year.
There is a need for us to be agile and adapt to changes in the segment and shift our compliance resources to the behaviours that are the most egregious. In addition, we are attempting to move to a more real time approach for compliance intervention.
The ATO compliance approach will include a focus on in-house audit arrangements, reciprocal audit arrangements, market valuation issues, the fitness and propriety of auditors and SAN misuse.
Members provided feedback that ‘file swaps’ between auditors is still prevalent behaviour and relevant for the ATO in considering independence issues. The ATO confirmed that this is a recognised risk and part of our consideration for any compliance cases.
Members also brought to the ATO’s attention an issue observed by peer reviewers on independence matters. They noted that issues which are addressed in the peer review report or memo, may not be provided to the ATO when the firm/auditor is reviewed by the ATO.
The ATO notes this feedback and while we would consider this as evidence in instances where the firm has independence threats (if they are provided), peer reviewers that have concerns they wish to flag, can use the ATO Tip-Off Form to bring it to our attention.
Key topics discussed at the SMSF Auditors Professional Association Stakeholder Group meeting 11 August 2022