Wednesday, 24 September 2008 
 
 
 
The Institute of Chartered Accountants in Australia (the Institute) acknowledges the improvements that have been made by auditors of self-managed super funds (SMSFs) and agrees with Assistant Deputy Commissioner Taxation, Ian Read that there have been signs of improvement in the performance of the industry, but cautions that further improvement is necessary. 
 
The comments were made in light of a recent ATO review that found the level of Superannuation Investment Supervision Act (the Act) breaches has reduced dramatically in the past three financial years.  
 
“While the ATO’s review displays a significant improvement in auditing standards, when compared to the previous 2004 results there is still room for improvement. The 2004 results were different as they were a statistical benchmarking exercise and auditors were selected at random. The 2007/2008 results are from the ATO review programs and include a targeted selection of cases based on identified risk criteria,” said Hugh Elvy, Head of Financial Planning and Superannuation, at the Institute of Chartered Accountants in Australia.  
 
“The fact that a targeted campaign by the ATO has resulted in a reduction in SIS Act contraventions, when compared to a more general sample, proves that the betterments have been substantial.”  
 
“The improvement in the number of breaches can be put down to the work the profession has conducted through its education and awareness programs for auditors of SMSFs. However, despite the significant improvement, the accounting profession is not resting on its laurels,” said Mr Elvy. 
 
In February this year, the joint accounting bodies released a set of competency requirements for auditors of SMSFs. These competency requirements make it clear that auditors must be able to complete the tasks of planning, evidence gathering, evidence evaluation and decision making. 
 
The issue of independence and conflicts of interest are areas noted by the ATO and these are areas the Institute has recently focussed on with communication and education to members. Last week the Institute, with the three accounting bodies, released an independence guide which specifically outlines case studies relating to SMSFs and independence. This guide has been welcomed by the industry and the Institute’s members. 
 
“It is expected that the number of working papers rated as less than satisfactory, as the measurement of the quality of audit papers in the 2007/2008 results, will continue to improve over the next reporting period as the industry moves to continue to educate and develop requirements for auditors in their membership.”  
 
“The professional accounting bodies have welcomed the announcement of the SMSF guidance statement that will be released by the Auditing and Assurance Standard Board next month. The guidance statement represents the next step in a series of initiatives designed to assist, and enhance the role of auditors of SMSFs as well as helping trustees discharge their responsibilities.” Mr Elvy said.  
 
The Institute continues to work closely with the ATO and the standard setters as it develops further practical tools and guidance for professional operating in the SMSF sector.