Auditor registration could reduce questionable SMSF auditors
A proposal to introduce a registration requirement for accountants who audit self-managed super funds (SMSFs) could reduce not just the number of auditors performing a small number of audits each year, but the total number of auditors servicing the SMSF sector.
SMSF Professionals' Association of Australia (SPAA) chair Sharyn Long said there was still concern over auditors who performed a small number of SMSF audits per year, but said the standard in the industry was generally high.
SPAA's view is that there should be some form of assessment for those doing a small number of audits, which would also make SMSF auditing less appealing for those who aren't suitably qualified, Long said.
The Government has flagged the introduction of an SMSF auditor registration process which may theoretically be introduced for 1 July this year.
Long said that although many accountants were waiting to see what form this might take, there had already been a surge in the number of SPAA members undertaking the group's specialist auditor accreditation.
There are approximately 11,500 approved SMSF auditors according to Australian Taxation Office records, of whom only around a third audit more than 20 SMSFs per year, Long said.
This meant a very large part of the market would be impacted by potential changes.
Multiport head of tax and accounting Kevin Sudlow said there was a definite question mark over accountants who performed five or less audits per year.
In many cases, this might be due to not wanting to refer business outside of their practices, so they were taking on work they were not adequately skilled to do, he said.
Larger administrators benefit from economies of scale and can cut down on the time and cost-per-audit because auditors know how the system works, but for someone doing a small number the cost-per-audit ends up being much higher.
Sudlow said that adding licensing requirements meant those performing a small number of audits would disappear when those regulations come in, but that there were still more than enough quality people around to provide sufficient quality audits at a competitive price.
However, Institute of Public Accountants (IPA) chief executive Andrew Conway said while there might be a "small number" of accountants not operating as they should, in general there was no huge problem needing to be fixed, and a burdensome or costly licence registration for SMSF auditors was unnecessary.
Audit competency is not an issue for IPA members because they need to have studied it to become members, he added.
A burdensome system could see people leaving the sector, and combined with ongoing growth in SMSFs could put pressure on the supply of adequately qualified people to service the sector, Conway said.
"There is a concern about the longer-term supply of professionals providing advice in SMSFs and more broadly," he said.
Recommended for you
ASIC has launched court proceedings against the responsible entity of three managed investment schemes with around 600 retail investors.
There is a gap in the market for Australian advisers to help individuals with succession planning as the country has been noted by Capital Group for being overly “hands off” around inheritances.
ASIC has cancelled the AFSL of an advice firm associated with Shield and First Guardian collapses, and permanently banned its responsible manager.
Having peaked at more than 40 per cent growth since the first M&A bid, Insignia Financial shares have returned to earth six months later as the company awaits a final decision from CC Capital.
