More detail on SMSF audit changes needed

11 May 2018

The SMSF Association is calling on the Government to begin consultation on the proposed changes to SMSF audits that were announced in the 2018-19 Budget.

The Association has received significant feedback from its SMSF specialist auditor members who are concerned with the practical implications and possible implementation details of the proposed audit changes as well as the effects on their audit businesses.

“As the result of this valuable feedback, we are working through the potential implementation issues of this proposal and would value early consultation so we can better understand the details of the proposal,” said Professor Deborah Ralston, Chair, SMSF Association after meeting with the Minister for Revenue and Financial Services, Kelly O’Dwyer, this morning.

“The policy was only announced as one of the Budget measures on Tuesday night, so we do not yet have the necessary detail to fully understand the implications of the proposed change.

“We understand that the Government’s objective is to enable SMSFs to be operated more efficiently. However, system efficiency needs to be balanced with the benefits of independent audit of SMSFs. The audit profession is an essential contributor to SMSFs being well-run retirement savings vehicles and SMSF auditors are a crucial component of maintaining a high degree of integrity within the SMSF sector,” said John Maroney, CEO, SMSF Association.

“While increasing the efficiency of the SMSF sector is an important objective, the integrity of SMSFs needs to be maintained,” Maroney said.

“Based on discussions with Treasury today, we understand that the proposal would require SMSF auditors to conduct an audit of activity occurring over a full three-year period for funds with a history of good record-keeping and compliance, which is a significant change from the current annual audit process.

“SMSF auditors need to understand the detail of how less frequent audits are expected to be conducted in a manner than increases efficiency, so they can understand the effects on their clients, on their professional obligations and on their businesses,” Maroney added.

“SMSF auditors play a key role in ensuring the SMSF sector is highly compliant with the taxation and superannuation laws,” said Belinda Aisbett, Chair of the SMSF Association Audit Discussion Group who also met with the SMSF Association Chair and CEO this morning and who will be providing substantial input from many SMSF auditors into the consultation process.

The Association will be closely consulting its members to formulate its submissions to Government on this issue and Treasury officials have agreed to participate in roundtable discussions in Melbourne and Sydney with SMSF auditors that are being arranged by the Association later this month.

Treasury would welcome written submissions from all interested parties before or after these roundtables to ensure that all voices can be heard on these important issues. Submissions can be sent directly to Treasury or via the Association (submissions@smsfassociation.com).

“We look forward to a constructive and transparent consultation process with the Government and Treasury on how this proposal will affect the SMSF sector, and our members will be a critical part of that process,” Maroney said.