The complexities of the SMSF sector is impacting the audit space.
The corporate regulator’s crackdown on SMSF auditor registrations may be occurring due to various factors largely based on complexities in the sector, according to an SMSF audit specialist.
Evolv executive director Ron Phipps-Ellis said these factors include immense price competition in SMSF audits over the past four years, the ageing auditor population and technological advancements. The Australian Securities and Investments Commission (ASIC) recently cancelled the registrations of 117 approved SMSF auditors who failed to lodge their annual statements. “Increased complexity in this sector might be just forcing some of the auditors who don’t specialise in SMSFs to be just giving up their licence voluntarily when they’re being asked to do so,” Phipps-Ellis told selfmanagedsuper. Audit fees have reduced dramatically over the past four years, leading the ATO to review auditors who possibly are not providing quality audit services for the price they are charging, with reduced prices driving significant competition, he added. He said the sector constantly faces competition from other auditors, with his firm taking on a new fund where the audit has not been performed to the standard he believes should have occurred. “Quality and pricing in the marketplace will continue to be a major issue and that’s where I’m concurring with the tax office approach in trying to deregister or disqualify those auditors,” he revealed. “And by pricing, I mean charging a fair fee that is representative of the work that they should be doing in that audit process.” Technology will also have a considerable impact on SMSF audits, resulting in new audit methodologies, which is changing the way audits need to be done. “There are a number of issues around that. If they’re getting a bit too old and they’re not getting enough audits, it’s all getting too hard for them,” Phipps-Ellis said. “But even for the younger auditors, SMSF audits are becoming a real specialisation now.” Further, generalist practitioners who conduct tax, accounting and superannuation audits are finding it difficult to keep abreast of the technology. “There’s also a larger number of firms that are appearing who are doing larger volumes of audits. That is also making it harder for smaller individual firms and the sole proprietor firms to keep up with the larger firms,” Phipps-Ellis said.
By Malavika Santhebennur
Self Managed Super
16 May 2018
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