Driving the change for SMSF auditors

Key Points

• In line with the Institute’s position, the federal government has confirmed that independence standards for SMSF auditors will be principles-based
• Discussions between government and the industry on the standards for auditor independence commenced with the Cooper Review in 2009; one suggestion is that prescriptive standards are implemented
• The government has also announced an extension to the period in which auditors need to provide their audit report to SMSF trustees; members feedback is welcomed.

Responsibility for the independence of self-managed super fund (SMSF) auditors will be left to auditors’ professional judgement, according to the latest government announcements on the Stronger Super reforms.

Discussions between government and the industry on the standards for auditor independence have been taking place since the Cooper Review convened in 2009, with one suggestion being that prescriptive standards, including mandatory outsourcing of all audit activity, be implemented.

Assistant Treasurer Bill Shorten has followed the Institute’s advice by ensuring that the principles-based approach that already applies to professional accountants, be applied to all SMSF auditors. The standard that will apply across the board is the Accounting Professional and Ethical Standards Board’s (APESB) APES 110 - Code of Ethics for Professional Accountants. The Institute’s Head of Superannuation, Liz Westover, says the Institute has always been against a 'tick the box' mentality towards SMSF auditor independence.

'It has always been the responsibility of professional accountants who carry out any type of audit to exercise their own professional judgement in relation to independence. This standard will now apply to all SMSF auditors, regardless of their professional association and is an excellent outcome that backs up the integrity of our own ethical standards,' Ms Westover.

Sensible change for SMSF auditors

The federal government has also proposed an extension to the period in which auditors need to provide their audit report to SMSF trustees as recommended by the Institute.

Ms Westover says the current rules around timing, in which SMSF auditors are required to provide SMSF trustees with their audit report no later than the day before the SMSF trustees are required to lodge their annual return, doesn’t leave any room for justifiable delays and imposes extremely harsh penalties.

'The government has considered the Institute’s concerns about the strict rules around reporting timing; this change will provide some relief to SMSF auditors,' she said.

The Institute will be making a submission to the government on the proposals, including the appropriateness of the penalty. Members are invited to contribute their thoughts and feedback emailing to the Institute.

Article last updated 23 December 2011