Government data matching across Australia has become very sophisticated. The amount of data readily accessible to the government is not only more than ever before, it is also more current and updated.
With the introduction of One Touch Payroll and Super Stream, it would be fair to predict an explosion of government reviews of the Superannuation Guarantee Charge and compliance required with other accounting obligations for companies in the future.
The Australian Tax Office (ATO) is focusing more than ever on employer obligation audits, payroll tax activity, work-related expenses, the sharing economy (e.g. Airbnb) and tax agent profiling. A wider outlook reveals that governments around the world are looking to transfer pricing or intercompany transactions with a push for taxpayers to ‘pay their dues’ in countries where they earn income. This doesn’t only affect larger companies like Google or Apple, but will have implications for multinational SMEs in Australia.
There is also a heightened focus also on crypto currencies (e.g. Bitcoin) and the cash economy.
To safeguard against the risk of fall-out with their clients as a result of the unpredictability of when and how much audits and government scrutiny will cost, it is increasingly prudent for accounting firms to insure themselves with an insurance solution that is designed specifically for accounting firms to provide a no net cost/no loss solution.
What the recent claims trends reveal
Accountancy Insurance, with its wide policy coverage across both Australia and New Zealand, has seen through more than 20,000 Audit Shield claims. According to Accountancy Insurance’s data, on average, in excess of one million dollars is paid per month in claims across Australia and New Zealand.
An analysis of recent claims trends reveals a drop in the emphasis of Business Activity Statement/ Goods and Services Tax verification, but based on what Accountancy Insurance believe to be a result of One Touch Payroll and Super Stream, an increase in employer obligation audits and broader audit scopes in Australia. We have also recorded that the cost of responding to an audit in Australia has increased on average since 2017 at a rate significantly higher than CPI.
How Accountancy Insurance can help
Accountancy Insurance’s flagship offering, Audit Shield covers accountants’ professional fees and the fees of experts, should your client be subjected to an ATO or other government agency initiated action in relation to a lodged return. This may include phone calls, risk reviews and right through to a full audit.
Deciding on the most appropriate insurance solution for protecting your accounting firm and your clients against the costs associated with the ever increasing impact of ATO or other government agency initiated action in relation to a lodged return is not one that should be gambled with.
We strongly encourage you to consider all the facts before deciding on a solution that best suits the needs of your firm and most comprehensively covers your clients.
These are some important questions to bear in mind when considering an audit insurance solution:
What does the audit insurance solution cover?
Audit Shield provides broad cover with no excess for the accountants’ professional fees, third party professional fees, audits relating to prior lodgements (whether lodged via your firm or a previous firm), specialist fees including tax experts, lawyers or other specialists, and much more.
Who is the policy underwritten by?
Accountancy Insurance hold an Australian Financial Services Licence and Audit Shield is underwritten by AAI Limited (trading as Vero Insurance, a subsidiary of Suncorp Ltd) in Australia, a prominent insurer, so you can be sure that all eligible claims relating to audit activity – both big and small – are covered with no risk to the accounting firm.
If I make a claim how simple is the claim process?
Accountancy Insurance tax audit claims are managed by a team of former accountants, which means we understand the audit process and what is involved in order for an accounting firm to best serve their clients.
How much work is required by the accounting firm to implement and offer the solution to my clients?
Software is an important support tool but software alone only gets your implementation to a certain point. It still needs the efforts of people to get the offers out to you clients’ inboxes or mail boxes. Accountancy Insurance not only has the software but couples that with a dedicated Account Manager to take the implementation process from your firm’s application to the delivery of the offer to your clients. This means minimal work is required by your accounting firm.
Does the solution fully comply with the local regulatory bodies?
When you consider a tax audit insurance solution, ensure that it is fully compliant with the local regulatory bodies such as the Australian Securities and Investments Commission (ASIC). In Australia, Accountancy Insurance has worked with regulatory bodies such ASIC to ensure that the Audit Shield offering is compliant. Seek tangible assurances from your solution provider and only rely on facts.
Audit activity is unpredictable but when it comes to ensuring your accounting firm and your clients have adequate audit activity coverage, Accountancy Insurance’s Audit Shield is the safe bet.
- Roman Kaczynski
Director, Accountancy Insurance