Show download pdf controls
  • ATO's role and compliance approach

    As a co-regulator of the SMSF auditor industry, together with the Australian Securities & Investments Commission (ASIC), we are responsible for monitoring compliance with the independence requirements as set out in the Code.

    If we identify approved SMSF auditors who are not complying with the independence requirements, we will take compliance action and may refer the matter to ASIC in line with our compliance approach.

    The restructured Code that commenced with effect from 1 January 2020 and the Independence Guide (May 2020) make it clear that auditors who are conducting in-house audits are at risk of not complying with the Code.

    We are aware that a number of firms are engaging in in-house audits. They will need time to restructure or make changes to arrangements so they can comply with the independence requirements. As a result, we have taken a transitional approach to compliance with these standards that impact in-house audits:

    • During the 2020–21 income year we took an educative approach to compliance and supporting auditors to help them meet their obligations. Auditors also used their professional associations for further guidance and support in relation to compliance with the Code.
    • For any audits completed on or after 1 July 2021 (regardless of the income year to which they relate), we will enforce compliance with the requirements. We will take compliance action if we find auditors are not complying with the requirements and may refer auditors to ASIC for further action. We expect to see evidence on the audit file that the independence requirements have been complied with.

    We expect all firms (or network firms) that conduct in-house audits to have already restructured to meet the independence requirements for all audits from 1 July 2021.

    Firms should use their professional judgment and this guidance material to assess whether their specific arrangements comply with the standards as set out in the Code. We cannot provide certainty about proposed arrangements in the absence of a complete analysis of the facts and circumstances. We are only likely to undertake this type of analysis where we undertake a compliance review.

    If we undertake a compliance review on a firm that did not finish restructuring by 1 July 2021, the firm will need to:

    • show they have made genuine attempts to restructure
    • provide reasons why they were not able to complete the restructuring process in time.

    We will consider the reasons provided when undertaking our review and deciding what compliance action to take, including whether to grant an extension of time to complete the transition. We are unlikely to grant an extension unless a firm can demonstrate exceptional circumstances that prevented them from restructuring.

    A failure to comply with the independence requirements as set out in the Code is a breach of the SISA and SISR.

    If we identify auditors who are not complying with the requirements, we may take compliance action and refer the matter to ASIC.

    If ASIC determines an auditor to be non-compliant, they may disqualify them from being an approved SMSF auditor, suspend or cancel their registration or impose conditions. They may also issue a media release or provide information about the matter to the auditor's professional association.

    During the 2021–22 income year, we will continue to provide support and guidance to SMSF auditors and tax professionals on auditor independence issues.

    See also:

    Resources for SMSF auditors

    SMSF auditors can refer to and download the following products:

      Last modified: 31 Aug 2021QC 65083