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The tax office has circled hundreds of audit firms for a visit this year, with concerns in particular about independence and low-cost, high-volume services.
The ATO will visit 300 firms which provide SMSF audits, with a view to “seek assurance” on compliance requisites.
High risk practices for the tax office include auditors who appear to be auditing funds where they have had a role or responsibility for preparing the accounts and financial statements, low-cost auditors and auditors who appear to be auditing relative’s funds or similar.
In the financial year to date, the ATO has made 30 referrals to ASIC for concerns we’ve had over SMSF auditors, which is eight up from referrals made for all of the 2016/17 financial year.
Auditors have been more broadly on the corporate regulator’s radar also, particularly given the new accounting standards which took effect this year.
On Friday, at a parliamentary committee meeting, ASIC commissioner John Price said about a quarter of audit files in a spot check of 93 did not satisfy auditing benchmarks.
Findings like this suggest “ongoing attention” is warranted, Mr Price said.
Late last year, ASIC said audit firms would be subject to inspection in FY17/18 with a focus on asset values, revenue recognition, firm culture, sufficient audit evidence, application of professional scepticism and use of experts.
ASIC singled out large audit firms, particularly in relation to the quality of audits they prepare.
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