Recent figures from ASIC indicate that during the 2019–20 income year, over 200 SMSF auditors left the SMSF auditing space as auditors grapple with changes in independence standards and increased scrutiny from regulators.
Over 200 SMSF auditors exit the industry
In figures provided to SMSF Adviser, ASIC stated that at 30 June 2020, there were 5,699 approved SMSF auditors, with 220 auditors leaving the SMSF auditing industry since the previous financial year.
Since June 2016, the number of approved SMSF auditors registered with ASIC has declined by 972 auditors.
The ATO stated in September that during the 2019–20 financial year, ASIC had imposed conditions on five SMSF auditors, disqualified two and suspended another. Five auditors had also voluntarily deregistered while the outcomes of a further 12 auditors are yet to be determined.
DBA Lawyers director Daniel Butler previously explained that in recent years, auditors have been facing greater responsibility, increased scrutiny from regulators and higher liability risks.
“The ATO is looking at these [audit] files in great detail, seeing whether the relevant evidence existed and that appropriate records of the work were undertaken,” he said.
Due to the impact of COVID-19 and some of the related relief measures, auditors this year are also facing an increased workload.
Auditors are also transitioning to the APESB independence guidance which will impact firms that provide both the accounting and audit work for SMSF clients.
The ATO has warned these firms that the new standards will require a significant restructure of services and business operations.