The Auditor's Role. Shirley Schaefer, Director, BDO (SA) Craig Angove, Senior Analyst Reporting and Audit, ASIC

Transcription

1 Shirley Schaefer, Director, BDO (SA) Craig Angove, Senior Analyst Reporting and Audit, ASIC Howard Dickinson, Director, SMSF Approved Auditors and AC Liaison, Superannuation, ATO

2 An opportunity to discuss the SMSF Auditors role with the key regulators, ASIC and ATO. The questions for us today: What is ASIC and the ATO currently doing in relation to SMSF Auditors What is it that they find and what concerns them What do they expect from the sector What are they doing for the sector How can we work together better for the good of the sector

3 ATO monitored the compliance of around 150 auditors in , our primary concern is that the annual independent audit is consistent and accurate and meeting the expectations as outlined in SISA. ATO s issues or risks are: Auditor Independence, whilst clear independence issues are decreasing we still have concerns and often when we find independence issues we find other issues Auditor knowledge and application of SISA, as we address independence as an issue we are now increasing our focus on SISA compliance Auditor competency and compliance with standards, as with SISA knowledge we are increasing our focus on this issue

4 ATO - Auditor Independence The incidence of clear independence breaches has reduced by over 70% over time. However, in we are currently investigating around 70 clear independence cases and while it is down from over 90 last year it s still not good enough. To date we have generally accepted that they stop auditing the fund, but for repeat behaviour or evidence of other failures of process or SISA application we will refer them to ASIC. This year we will also approach around 300 auditors where there are indicators of independence risk such as auditing funds they have potentially advised or prepared accounts for.

5 ATO - Compliance Monitoring Findings Of the 150 SMSF Auditors we looked at in an audit or review 47 agreed to stop auditing particular fund/s 28 received education/guidance about SISA 14 received education about independence obligations and expectations 27 decided to not register or withdraw from auditing 2 were referred to ASIC (making a total of 7 to date) 6 were referred to Tax Practitioners Board Some are still being progressed

6 Shirley Schaefer, BDO Audit Craig Angove, ASIC Howard Dickinson, ATO

7 ASIC Auditor Compliance ASIC has a strong strategic focus on Gatekeepers, including SMSF auditors. The role and behaviour of the SMSF auditors is also significant to ASIC and our regulation of others, including company auditors and financial service providers. The same area that regulates company auditors is responsible for SMSF auditors. Our focus has been on registration, but is moving to referrals from ATO and ongoing compliance.

8 ASIC Auditor Compliance We rely on our information sharing and relationship with the ATO also the TPB, and our cooperation with professional bodies and standard setters. We receive referrals from the ATO and go through our own show cause process. We decide on SMSF auditor: disqualification, suspension, conditions, cancellations

9 ASIC Registrations Since taking on the responsibility as registrar, ASIC has registered 7,235 SMSF auditors, mostly under transitional arrangements. Around 300 have been registered without the benefit of the transitional exemptions (experience, exam). There are currently 6,689 SMSF auditors on our public register. Three refused applications have progressed to the Administrative Appeals Tribunal, after already being reviewed and confirmed by ASIC delegates. In each case they went on to be withdrawn by the applicant. Our public register of disqualified SMSF auditors includes those carried over from the ATO and 2 new disqualifications.

10 ASIC The Exam 1,563 exams have been delivered with an overall 18.5% failure rate. 1,421 auditors were registered in the transitional period with an exam condition pass the exam by 1 July 2014, within two attempts. An extension was given to 31 August We have since cancelled the registration of 440 auditors did not attempt the exam and 67 did not pass the exam. Many of these auditors are reapplying for registration. ASIC has also disqualified two SMSF auditors who overstated the number audit reports issued by them in their registration application, thereby avoiding the requirement to sit the competency exam.

11 Shirley Schaefer, BDO Audit Craig Angove, ASIC Howard Dickinson, ATO

12 ATO State of the Sector Since 2012 when Auditor Registration was being discussed, we have seen: Drop in the overall number of auditors down 39% Decrease in the number of smaller scale auditors with less than 20 funds down 32% 25% of auditors identifying and reporting contraventions

13 ATO State of the Sector From a SMSF sector risk perspective we have seen: Decrease of 38% in funds audited by those who audit less that 20 Increase of 6% in the number of funds audited by those who audit over 50

14 ATO State of the Sector In Summary A significant shift with the number of and value of funds being audited by smaller scale auditors decreasing and larger more professional auditors increasing More auditors lodging ACRs This should improve consistency and allow ATO and ASIC to better ensure quality

15 ATO Compliance where to from here Looking forward ensuring the quality and consistency of SMSF audits is always going to be an ATO focus. As such we will; Take action to ensure that all SMSFs are meeting their audit obligations Work with ASIC and industry to improve our support and engagement of auditors to ensure they understand their obligations Take firmer action to stop independence issues Testing auditor understanding and compliance with auditing standards and SISA obligations, including the processes of large scale auditors Work with ASIC to get those who can t or won t comply out of the system

16 Shirley Schaefer, BDO Audit Craig Angove, ASIC Howard Dickinson, ATO

17 Disclaimer Shirley Schaefer, BDO Audit Craig Angove, ASIC Howard Dickinson, ATO This presentation is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. The presentation has been prepared without taking into account any personal objectives, financial situation or needs. It does not contain and is not to be taken as containing any securities advice or securities recommendation. Furthermore, it is not intended that it be relied on by recipients for the purpose of making investment decisions and is not a replacement of the requirement for individual research or professional tax advice. This presentation was accompanied by an oral presentation, and is not a complete record of the discussion held. No part of this presentation should be used elsewhere without prior consent from the author.