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ASIC deregisters 374 SMSF auditors

Super

UPDATED: The regulator cancels hundreds for failing to lodge annual statements after warnings last year.

By Miranda Brownlee and Philip King 10 minute read

ASIC has deregistered 374 SMSF auditors after they failed to lodge annual statements with cancellation notices sent out last week.

The move came after ASIC warned SMSF auditors with outstanding annual statements last August that it would cancel their registrations, although most of the 1,400 SMSF auditors it approached subsequently lodged.

The regulator said ATO data revealed the cancelled operators had not performed a significant number of SMSF audits in the past two to three years.

ASIC said the auditors were vital in administrating more than 600,000 funds with $865 billion in assets.

“SMSF auditors play a fundamental role in promoting confidence and instilling trust in the SMSF sector,” ASIC commissioner Danielle Press said. “It is crucial that SMSF auditors comply with their regulatory obligations.”

“ASIC will continue to take action where they do not meet these obligations.’

SMSF auditors needed to lodge annual statements or risk cancellation of their registration, and had to ensure their contact details were kept up to date.

ASIC also cancelled the registration of 10 SMSF auditors in June last year after they repeatedly failed to lodge annual statements.

Accountants Daily sister publication SMSF Adviser has previously reported that some SMSF auditors intentionally stop lodging annual statements to be removed from the system automatically and avoid paying the $899 exit fee.

The fee was first imposed in 2018 and ASIC also set a $1,927 registration fee for SMSF auditors.

Speaking on the SMSF Adviser Show last year, Smarter SMSF chief executive Aaron Dunn said the failure of SMSF auditors to lodge annual statements was a “case of economics” rather than mischief. 

“There are auditors who have thought, ‘well, I don’t see the need to pay. I can just not lodge and then I’ll be booted out of the system because I no longer have any interest being an SMSF auditor’,” Mr Dunn said.

“The reality is that some of those registration cancellations aren’t a representation of them actually doing anything underhand; it’s simply just a case of economics.”

The exit fee for SMSF auditor registrations has been a significant gripe for the industry since its introduction, with the accounting bodies and SMSF Association all calling for its removal. 

In October last year, Treasury released draft legislation which would significantly reduce the fee to $193.

This latest ASIC update follows the referral of 13 SMSF auditors by the ATO last year as part of its top 100 and high-risk auditor programs.

It also follows action by ASIC during the September quarter against six SMSF auditors due to breaches of obligations including auditing and assurance standards, independence requirements and registration conditions, or because ASIC was satisfied the individual was not a fit and proper person to remain registered.

SMSF trustees and members can check whether their auditor is registered by searching ASIC's SMSF Auditor register.

The Superannuation Industry (Supervision) Act 1993 has made it a requirement that all SMSFs auditors have to be registered with ASIC since 1 July 2013 as a way of ensuring they meet standards of competency and expertise.

Annually, SMSF auditors must (under s128G of the SIS Act) lodge a statement with ASIC within 30 days of the anniversary of their registration.

A cancelled SMSF auditor may reapply for registration in the future or request that ASIC review a decision it has made against them.

If the decision is confirmed or varied, the SMSF auditor may apply to the AAT for further review.

ASIC last undertook a SMSF auditor annual statements compliance program in 2018, which resulted in the cancellation of 117 SMSF auditors. 

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