A mid-tier firm has issued a warning that offering low-cost SMSF audits can be detrimental in the long run if it leads to professional indemnity claims from clients whose audits aren’t compliant.
Mid-tier comes out swinging at low-cost audits
Walker Wayland NSW audit and assurance principal Wali Aziz has warned accountants that offering low-cost SMSF audits isn’t necessarily a good idea in the long run.
Mr Aziz said that the ATO’s review of SMSF audit providers that were charging less than $400 identified areas of significant concern, in which low-cost SMSF audits did not comply with a bulk of the prescribed standards.
“These included no written audit plans or audit planning meetings, no representation letters from trustees, inadequate assessment of risks and inadequate review of trust deeds and property searches,” Mr Aziz said.
“The problem is that clients, the trustees, are exposed to any potential ATO penalties and fines for breaching the audit rules. The accountants themselves could then be exposed to a professional indemnity claim and all of a sudden, the low-cost audit is very expensive.”
Low-cost SMSF audits have been a key area of focus for the ATO in the 2016/17 financial year, with SMSF auditors who promise a guaranteed low fixed fee, regardless of complexity of the fund, raising a red flag with the tax office.
“The SMSF auditor role is a significant integrity check within the system and if we can have confidence that it is working appropriately, it gives us assurance about the compliance system more generally,” said the ATO's Kasey Macfarlane.
“What would concern us is if we see SMSF auditors not necessarily providing their skill and judgement, just relying on the automated process to do the finance checks, and then not actually turning their mind to the regulatory issues,” she added.
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