Competency standards for Fellows of the NTAA auditing SMSFs

Competency standards for Fellows of the NTAA auditing SMSFs National Tax & Accountants Association Ltd. 1

Contents Introduction.. 3 Background. 4 Auditing an SMSF.. 5 The planning phase of the audit ASA 300.. 5 Performing the financial audit of an SMSF.9 Performing the SIS compliance audit of an SMSF.. 10 Forming an audit opinion on an SMSF... 12 Minimum Continuing Professional Development ( CPD ) requirements.. 13 Disciplinary procedures for Fellows of the NTAA.. 14 2 National Tax & Accountants Association Ltd.

Introduction Recent ATO information has revealed that the number of self managed superannuation funds ( SMSFs ) increased by approximately 47,500, during the period of 1 January 2007 to 31 December 2007. Furthermore, in a speech delivered by the Commissioner of Taxation, Michael D Ascenzo, on 12 March 2008, he indicated that the value of assets currently managed in SMSFs has grown to almost $300 billion. Other ATO and Treasury estimates have also revealed that the current range of tax concessions offered to SMSFs cost the government approximately $10 billion annually. Naturally, the unprecedented growth in SMSFs has escalated the importance of the role being played by SMSF trustees and approved auditors in ensuring that SMSFs comply with superannuation law. SMSF trustees are empowered to make many decisions regarding the operation of an SMSF and the investments undertaken by the fund. However, SMSF trustees must also ensure the fund is operated in accordance with the superannuation laws governing the running of the fund and they must also ensure that all investments undertaken (or maintained) by the fund also comply with the superannuation investment rules. In addition, trustees of an SMSF must also appoint an approved auditor to conduct a financial and SIS compliance audit of an SMSF. An approved auditor is a person specified within SIS regulation 1.04(2) who does not have a disqualification order in force. Refer to S.35C and S.131 of the Superannuation (Industry) Supervision Act 1993 ( SIS Act ). Importantly, an approved auditor is expected to exercise an appropriate level of competency when discharging their audit responsibilities. As a result, the National Tax & Accountants Association Limited ( NTAA ) has now formalised a set of competency standards which Fellows are expected to satisfy before they are permitted to audit an SMSF. These competency standards have been devised to ensure that Fellows of the NTAA (who qualify as approved auditors) have the requisite level of skill and knowledge that is necessary when properly auditing an SMSF. National Tax & Accountants Association Ltd. 3

Background It is only an approved auditor who is empowered to audit an SMSF s financial statements and conduct a SIS compliance audit. It should be noted that there are substantial fines and penalties imposed on individuals who are not regarded as approved auditors and who conduct an audit of an SMSF. An approved auditor is defined under SIS Regulation 1.04(2) as a registered company auditor or a person who is a member of any of the following bodies: Professional body/association National Tax and Accountants Association Ltd CPA Australia Institute of Chartered Accountants in Australia National Institute of Accountants Association of Taxation and Management Accountants The Auditor-General of the Commonwealth, a State or a Territory of Australia. Category of membership needed to audit SMSFs Fellow Member Member Member Member or Fellow Not applicable However, a person cannot be an approved auditor if there is a disqualification order in force under S.131 of the SIS Act. This may occur where the Regulator (i.e., the Commissioner of Taxation) has made a written order disqualifying a person from being an approved auditor. Once an approved auditor has been appointed, they must provide trustees of an SMSF with an audit report on the operations of the fund for the relevant income year. The audit report must be provided in an approved form and it must review the fund s financial accounts and compliance with the SIS Act and Regulations. The approved form breaks the audit into two segments, being the financial report audit and the SIS compliance audit. Approved auditors can insert additional information if the scope of the audit extends, however, they cannot reduce the scope of the audit. The Auditing and Assurance Standards Board (AUASB) have also issued Australian Auditing Standards ( ASAs ) which provide the minimum requirements an auditor must satisfy when discharging their audit function. These new mandatory auditing standards came into effect from 30 June 2007. These auditing standards apply to approved auditors who conduct an audit of an SMSF for any income year ending on or after 30 June 2007. That is, approved auditors will be required to comply with the mandatory audit standards for audits they conduct on SMSFs for the 2007 income year and following. A copy of these NEW mandatory auditing standards can be found on the AUASB website at www.auasb.gov.au. 4 National Tax & Accountants Association Ltd.

Auditing an SMSF Auditing an SMSF involves a number of specific stages in which approved auditors must be able to demonstrate a level of competency. These stages are as follows: 1. The planning phase of the audit ASA 300; 2. Performing a financial audit of an SMSF; 3. Performing the SIS compliance audit phase on an SMSF; and 4. Finalising the audit (including forming an audit opinion). Importantly, approved auditors must understand each of the stages mentioned above and be familiar with the specific requirements contained within the Australian Auditing Standards. In addition, approved auditors must also consider the paperwork requirements associated with auditing an SMSF under the Australian Auditing Standards. In particular, ASA 230 specifies the audit working papers (i.e., documentation) an approved auditor is expected to maintain as part of auditing an SMSF. This auditing standard provides guidance but does not prescribe the required extent of audit working papers because this is almost impossible. At a minimum, the audit work papers should show: the nature, timing and extent of procedures; the conclusions reached from those procedures; and significant matters identified from those procedures and the conclusions. Sufficient evidence relates to the quantity of audit evidence required to draw reasonable conclusions see ASA 500. Professional judgement is to be exercised by the auditor after contemplating issues such as high risk areas requiring additional evidence. Reliability of evidence is influenced by the independence of the source and an assessment of materiality of the item being audited. Approved auditors should also remember that the quality of their working papers will also represent objective evidence on their level of competency. Comprehensive audit working papers also give approved auditors the ability to vindicate their audit opinions and provide evidence on their process for evaluating quality control procedures of the fund and within the accounting firm. 1. The planning phase of the audit ASA 300 Naturally, before an approved auditor can commence the audit of an SMSF, they need to plan the scope of the audit. In the past, the planning phase was largely at the discretion of the approved auditor. In most cases, this process would normally only include the relevant documentation (e.g., engagement letters and trustee representation letters) which had a direct influence on the audit. In effect, an approved auditor had the capacity to streamline auditing an SMSF by conducting a comprehensive plan before completing the audit. However, under the NEW ASA 300, approved auditors are now required to document the overall audit strategy and audit plan. An approved auditor is also required to document any significant changes that have been made during the course of the audit engagement by the approved auditor. Furthermore, an approved auditor is compelled to contact the previous auditor (where appropriate) relative to the ethical requirements for the audit engagement. National Tax & Accountants Association Ltd. 5

Using appropriately drafted engagement letters An engagement letter can be used by an approved auditor as a mechanism for establishing the level of legal responsibility they accept in an audit engagement. This document may allow an auditor to stipulate the terms of the audit and, if properly drafted, can serve to significantly reduce confusion regarding the scope of an audit. The engagement letter must be drafted in accordance with ASA 210 Terms of the Audit Engagement, which addresses the nature and scope of the audit engagement. Ideally, an engagement letter should address the following matters: the scope of the audit; the responsibilities of the approved auditor including those imposed by S.129 and S.130 of the SIS Act; the responsibilities of the trustees, including the maintenance of a satisfactory internal control system, the maintenance of trustee minutes for at least 10 years, and compliance with SIS requirements; any mandatory requirements contained within ASA 210; an outline of the general audit procedures; and the audit fee arrangements. An approved auditor is not required to issue an annual engagement letter to a recurring client (e.g., the trustees of an SMSF) unless the terms of the engagement are revised or the auditor believes it is prudent to re-confirm the nature of the engagement. Applying the concept of auditor independence All approved auditors should consider the remarks on auditor independence as defined within the Australian Auditing Standards. An approved auditor must be able to demonstrate they have conducted an audit independently and that they have complied with the requirements prescribed by their professional association. In practical terms, an auditor can demonstrate independence where a reasonable person would conclude the auditor has put themselves in a position whereby their objectivity will not be compromised. However, an auditor must also remember that the concept of independence is defined within the Auditing Standards. At Paragraph 15 and 16 of Australian Auditing Standard ASA 220 Quality control for audits of historical financial information, the standard requires that a partner of an accounting firm must make the assessment regarding possible breaches associated with performing the auditing function independently. To that end, Paragraph 15 of ASA 220 makes reference to the following issues for the partner of an accounting firm to consider as part of the engagement: Obtain relevant information from the firm and, where applicable, network firms, to identify and evaluate the circumstances and relationships that create threats to independence; Evaluate information on identified breaches, if any, of the firm s independence policies and procedures to determine whether they create a threat to independence for the audit engagement; Take appropriate action to eliminate such threats or reduce them to an acceptable level by applying safeguards. The engagement partner shall promptly report to the firm any failure to resolve the matter for appropriate actions; and Document conclusions on independence and any relevant discussions with the firm that support these conclusions. 6 National Tax & Accountants Association Ltd.

Devising an audit plan in accordance with ASA 300 The planning stage is arguably the most important part of the audit process as it develops a strategy to ensure that the responsibilities of the approved auditor are fulfilled. The following table lists the matters that the auditor must consider when preparing an audit plan. Planning issue to be considered Knowledge of the SMSF ASA 315 Internal control structure of the SMSF ASA 315 Co-ordination, direction, supervision and review of the audit process Risk and materiality issues ASA 320 Possible factors In planning the audit of an SMSF, the auditor would include a consideration of the general economic factors and industry conditions affecting the SMSF. The auditor should also be aware of the important characteristics of the SMSF, its activities and financial performance, specific reporting requirements and any changes since the last audit. An assessment of the general competence of the trustees should also be made. The auditor should consider the accounting policies of the SMSF. The auditor should note the potential impact of any new accounting or auditing pronouncements issued by the accounting profession. The auditor should also use their overall knowledge of internal controls to determine the degree of testing of control and substantive procedures. In planning the SMSF audit, the auditor should consider the need to obtain expert opinions (e.g., from actuaries) in the audit. The auditor should also identify what staffing requirements need to be addressed, such as the number of staff required and their experience. The auditor should consider what will be the significant audit areas and the expected assessments of the inherent risks and control risks of an SMSF. The auditor should establish the materiality levels for the financial reports of the SMSF. Consideration must be given to whether the matter has been specified in the approved form, in which case the approved auditor must notify the ATO (as Regulator). It is these breaches which may culminate in the audit report being qualified and notification to the ATO. When considering the issues of risk and materiality, the auditor should be aware of the possibility of a material misstatement, fraud or a breach of the SIS Act. This assessment should also consider the identification of complicated accounting issues, including valuations and estimates. National Tax & Accountants Association Ltd. 7

Planning issues to be considered Nature, timing and extent of audit procedures Possible factors In planning the SMSF audit, the auditor should be aware that circumstances may arise during the course of the audit which may change the emphasis in specific audit areas (e.g., a fraud is identified). The auditor should consider the impact of information technology on the audit, for example, internet-based share transactions. The auditor should consider the need for sampling techniques and analytical procedures as part of the method of obtaining sufficient audit evidence. Auditors need to be aware of the various time frames in respect of lodgement of the income tax return. Once the lodgment dates for individual funds have been established, auditors will need to communicate the time required to complete the audit to trustees to ensure the tax and auditing deadlines can be met. Other issues to be considered In planning the SMSF audit, the auditor must be mindful of the following issues: Types of investments; The auditor must ensure that the SMSF is a going concern; The existence of related parties to the SMSF (i.e., where the fund purchases assets from related parties) may cause issues to arise during the audit; The terms of the audit engagement (i.e., refer to the engagement letter) and any statutory responsibilities (i.e., the SIS Act); and The nature and timing of any reports or other communication with the entity that are expected under the engagement. Competency objectives in audit planning phase An approved auditor should be capable of demonstrating knowledge in the following areas when undertaking the planning phase of an SMSF audit: An awareness of the ethical standards associated with any engagement (this includes an awareness of the need to demonstrate auditor independence and ethical clearance issues for new engagements); The terms of the audit engagement. In most cases, this will require approved auditors to specify the nature of their engagement (via an engagement letter) and responsibilities they undertake by accepting the engagement; The planning phase of the SMSF audit. This would include the ability of the approved auditor to document the overall audit strategy and audit plan (as required by ASA 300). Approved auditors also need to document any amendments to the audit plan; and A detailed understanding of the SIS compliance issues which need to be examined as part of the audit. Approved auditors should be sufficiently familiar with the ATO s expectation in this regard and this information can be found in the ATO s publication titled Roles and responsibilities of approved auditors. 8 National Tax & Accountants Association Ltd.

2. Performing a financial audit of an SMSF A financial audit is generally designed to ensure that all information contained in the financial statements is a correct reflection of the financial position of the SMSF, and this allows the auditor to assess whether the fund is a going concern. The review will need to consider issues associated with the existence, completeness, valuation (i.e., accuracy) and disclosure of information in the fund financial statements and income tax return. In effect, the fundamental purpose of a financial audit is to ensure that the financial accounts materially reflect the financial position of the fund. As such, approved auditors must ensure they identify any risks associated with the financial statements which may lead to a material misstatement of the fund s financial position. Accordingly, a financial statement audit of an SMSF needs to review the following aspects of the relevant fund: Contributions received by the fund; Investments/assets of the fund; Income/expenses of the fund; Benefits paid by the fund; Liabilities; and Other considerations. Approved auditors need to undertake a thorough examination of the above issues when reviewing an SMSF (including the assertions that are effectively being made in representing that the financial statements give a true and fair view refer ASA 500). Competency objectives in financial auditing phase An approved auditor must be able to demonstrate the following competencies when undertaking a financial audit of an SMSF: The ability to identify any risks which may lead to a material misstatement in the fund s financial statements; Application of the concept of materiality to the financial audit. The auditor may determine materiality based on a percentage of the fund balance or change in net assets. The percentage adopted by an auditor in this calculation will depend on the auditor s assessment of risk. It should be noted, that to fully comply with ASA 320, qualitative matters will need to be considered (such as the nature of the item involved) as part of the audit; Audit procedures in the event the approved auditor identifies areas of risk associated with the financial audit of the fund; An ability to evaluate controls, particularly where they involve direct access to assets of the superannuation fund. By way of example, an approved auditor should closely consider controls in relation to banking of the fund and investments involving related parties of the fund; An understanding of the auditing standards as they pertain to evaluating and testing the controls environment of the relevant SMSF; An understanding of the concepts involving gathering auditing evidence, audit sampling, documentation and financial assertions; and Ensure separate audit working papers and file are created and maintained in a manner that would allow a peer who has had no involvement with the fund to gain an insight in the work completed and the audit opinion that has been reached. National Tax & Accountants Association Ltd. 9

3. Performing the SIS compliance auditing phase The second phase of an SMSF audit is a review by the approved auditor of the fund s compliance with the SIS Act and Regulations. The SIS compliance phase normally occurs once the auditor is satisfied that there are no material misstatements within the financial statements of the fund. In the SIS Compliance audit phase, the auditor must determine whether the fund has complied with the general (e.g., sole purpose test) and specific (e.g., borrowings by trustees) operational restrictions placed on complying SMSFs. Under S.42A(5) of the SIS Act, an SMSF will pass the compliance test if the trustees did not contravene the SIS Act or its regulations. This requirement, however, is qualified, as the ATO is required to give consideration to the following if a contravention occurs: the taxation consequences if treated as non-complying; the seriousness of the contravention; and any other relevant circumstances. Listed below is a summary of the steps that an approved auditor must undertake when completing a compliance audit of an SMSF. Audit consideration 1. Is the fund a self managed superannuation fund? 2. Has the fund been operated pursuant to the sole purpose test? 3. Has an investment strategy been prepared & implemented? Explanations and examples A superannuation fund will satisfy this requirement where both of the following questions have been satisfied: Does the fund satisfy the definition of a self managed superannuation fund under S.17A of the SIS Act?; and Did the trustees of the fund elect to be a regulated fund and thus be governed by SIS Act and regulations? Auditors may find it difficult to apply this requirement because the sole purpose test is inherently subjective. Nevertheless, the sole purpose test will be satisfied where: In broad terms, the trustees can demonstrate the fund has been maintained for the sole purpose of providing benefits for members on their retirement, or for their dependants in the event the member dies. A fund will satisfy the investment strategy requirements where the trustees have formulated and given effect to an investment strategy. An investment strategy needs to take into account the following factors: The risk involved in making, holding and realising an SMSF investment; The composition of the entity's investments (i.e., diversification); The liquidity of the SMSFs investments having regard to its expected cash flow requirements; and The ability of the entity to discharge its existing and prospective liabilities. 10 National Tax & Accountants Association Ltd.

Audit consideration 4. Has the fund complied with the investment restrictions? Explanations and examples An auditor must ensure that all investments of an SMSF have complied with the rules contained under the SIS Act and regulations. Some of the more common restrictions that need to be considered are as follows: Have the in-house assets rules been satisfied?; Have the restrictions regarding lending and providing financial assistance been satisfied?; Has the fund breached restrictions associated with acquiring assets from members?; Has the fund breached the borrowing restrictions?; and Have the trustees provided a charge over any of the fund s assets? 5. Have the contribution and benefit payment standards been satisfied? 6. Have the administrative and documentation requirements been satisfied? The payment standards operate in conjunction with the sole purpose test and ensure that payments are only made to members when a condition of release has been satisfied. Some of the more common issues to consider are as follows: Have the voluntary cashing of benefits requirements been satisfied before payments were made to members?; Did the trustees maintain sufficient documentation when making in-specie distributions of benefits to members of the fund?; and Have the trustees satisfied all administrative obligations before paying a pension to a member? This requirement largely relates to the record-keeping obligations under the SIS Act. Some of the more common requirements to consider are as follows: Appointing an approved auditor; Making all documents available to auditors which relate to accounts and statements; and Reporting information to the ATO regarding the total contributions made by the member for the purposes of the contribution capping rules. Competency objectives in the SIS compliance auditing phase An approved auditor must be able to review the following aspects of an SMSF when undertaking a SIS compliance audit of an SMSF: A detailed understanding of the operational and investment restrictions which are imposed under the superannuation laws; An understanding of the documentation (i.e., paperwork) requirements trustees of an SMSF must satisfy when complying with the SIS Act and regulations. By way of example, trustees of an SMSF must record minutes of all meetings held in which matters affecting the fund were discussed and these minutes must be kept for at least 10 years; and A detailed understanding of the audit sampling and documentation expectations which must accompany any audit of an SMSF. National Tax & Accountants Association Ltd. 11

4. Forming an audit opinion on an SMSF Once an approved auditor has conducted their testing and completed a financial and SIS compliance audit they must then issue an opinion in relation to the fund. The audit opinion must be made in relation to whether the financial statements of the fund materially reflect a true and fair view of the fund. An approved auditor must also then form an opinion on whether the trustees of the fund have materially complied with the requirements contained within the SIS Act and associated regulations. To that end, approved auditors must maintain documentation (i.e., audit working papers) which explains the basis for their audit opinion in relation to the financial and SIS compliance audit of the fund. As mentioned earlier, audit working papers should be sufficient to allow a peer with no previous involvement with the fund to obtain an insight into the work undertaken and the basis for the audit opinion. As a consequence, an approved auditor needs to demonstrate the following competencies when issuing an audit opinion (whether qualified or not) in relation to the financial and SIS compliance audit of an SMSF: An understanding of the ATO s new mandatory and voluntary reporting requirements for any breaches an SMSF may have committed during an income year. To that end, approved auditors must have a detailed understanding of the new seven tests which must be considered when assessing whether a breach by the fund must be recorded on an Auditor Contravention Report ( ACR ). Further guidance on the new seven test format can be found in the ATO s publication titled Completing the auditor/actuary contravention report ; An understanding on which breaches an approved auditor should consider recording in an ACR where the breach does not fail one of the seven tests referred to above; A detailed understanding of the information requirements which are now contained in the ATO s approved form for the new audit report. At a minimum, approved auditors must ensure their audit report includes all information and wording which is now included in the ATO s new approved form audit report; A clear understanding that all breaches of the SIS Act and its regulations must be reported to the trustees and this normally occurs in the management letter. Trustees are then given a reasonable time to rectify the breaches identified by the auditor. That is, an auditor must report all breaches to the trustees of the SMSF and this normally occurs in the management letter; An understanding of the 2008 Self Managed Superannuation Annual Return ( 2008 SMSF return ) disclosure requirements associated with auditing the fund. More specifically, approved auditors must ensure that all labels on the 2008 SMSF return which relate to the audit of the fund (e.g., Item 6 Label A, which asks whether the audit report was qualified) have been correctly prepared; Use their professional judgement and identify any material misstatements within the financial statements which may result in a qualified audit opinion; Interpret the information gathered as part of the financial audit of the SMSF to ensure they form an appropriate audit opinion in relation to the relevant fund; and Apply the appropriate audit sampling and testing techniques (as specified within the Australian Auditing Standards) which are designed to ensure the auditor does not form an inappropriate audit opinion on the financial position of the fund. 12 National Tax & Accountants Association Ltd.

Minimum Continuing Professional Development ( CPD ) requirements Within the context of the NTAA, it is only Fellows who are eligible to audit SMSFs as approved auditors. Refer to SIS Regulation 1.04(2). Eligibility criteria to become an NTAA Fellow An NTAA member is eligible to become a Fellow (and thus audit SMSFs as an approved auditor) where they satisfy certain educational and CPD requirements (as per the NTAA s by-laws). In broad terms, an NTAA member is eligible to become a Fellow where they satisfy one of the following requirements (as contained in paragraphs 7.1(a) and (b) of the Constitution of the NTAA): They are a current member of an Australian accounting body designated in the by-laws (e.g., CPA Australia and Institute of Chartered Accountants) as approved by the Council who holds any additional qualifications as specified by the by-laws; or A person who has in the three years preceding the application: practised as a principal in a public practice; or worked in a public practice as an employee or has been supervised by a person, who during the relevant period, was qualified to be a Fellow and who verifies that the applicant worked on a broad range of income tax returns, income tax advice and other public practice accounting functions during that three year period; and either is the holder of a recognised degree or diploma from a recognised tertiary education institution; or is the holder of a degree or diploma (other than a recognised degree or diploma) from a tertiary education institution and in the course of that degree or diploma and/or in the course of subsequent post-graduate studies has successfully completed a major (being 3 years of full time study or 6 years part time study) in accountancy or the equivalent of such a major and has successfully completed studies in taxation as prescribed by the by-laws at any time, or has had considerable experience in the preparation of income tax returns and the provision of income tax advice. Furthermore, a Fellow who wants to audit SMSFs as an approved auditor will generally also need to satisfy the additional requirement of completing a unit in auditing (relative to their qualification), adopt the Australian Auditing Standards and satisfy the competency standards. On-going CPD requirements for Fellows of the NTAA A Fellow of the NTAA is then required to undertake on-going CPD and personal development as stipulated within the NTAA s Constitution and by-laws. In general terms, Fellows of the NTAA who hold a current practising certificate are required to undertake and complete a minimum of 30 hours (being 15 hours of structured training and 15 hours of unstructured training) of continuing education or professional development in each calendar year. Refer to paragraph 9 of the by-laws of the NTAA. Importantly, Fellows of the NTAA are entitled to take into account a combination of formal and informal programmes when assessing whether they have satisfied their annual CPD requirements. By way of example, under paragraph 9(l) of the NTAA by-laws, a Fellow is entitled to a credit of 1 hour for every 1,000 words of an article researched and prepared by a Fellow and published in taxation or accounting publications or such other publication as the Council may approve to a maximum of 5 hours. National Tax & Accountants Association Ltd. 13

Additional CPD requirements for Fellows who act as approved auditors The NTAA Board s additional CPD requirements should apply for any Fellows who wish to use this designation to audits SMSFs. In particular, the NTAA Board has taken the view that additional CPD requirements should be devised for Fellows who audit SMSFs, being an approved auditor. These additional guidelines only apply to Fellows who audit SMSFs (i.e., they act as an approved auditor) and have been developed in conjunction with the ATO. The guidelines have been developed to ensure that NTAA Fellows continue to demonstrate the requisite level of skill and judgement necessary to undertake an appropriate audit of an SMSF. As a consequence, Fellows of the NTAA who audit SMSFs (i.e., they are approved auditors) must undertake a minimum of 20 hours CPD over a three-year period, which must include the following categories: 16 hours of superannuation-based training this training does not have to deal exclusively with auditing SMSFs and may represent training which includes an update of superannuation developments along with audit-based issues; and 4 hours of SIS compliance and financial audit-based SMSF training - this training will need to entail the process of undertaking a financial audit of an SMSF and also consider the SIS compliance aspect of auditing an SMSF. Ideally, the training will consider issues ranging from producing the audit file, audit working papers and consider the basis for forming an audit opinion. It should be noted that the 20 hour CPD requirements mentioned above are not in addition to the 30 hours of annual CPD training Fellows must complete. The SIS compliance and financial audit-based training should be structured and specialised to deal with audit-based issues pertaining to SMSFs. In other words, courses which examine broad issues associated with financial accounting and auditing will generally not be regarded as specific enough for the purposes of the above requirements. Naturally, the above represent minimum requirements and Fellows of the NTAA are also expected to independently update their knowledge as developments arise in superannuation. 14 National Tax & Accountants Association Ltd.

Disciplinary procedures for Fellows of the NTAA Under Paragraph 15.6 of the NTAA s Constitution, a member s practising certificate (i.e., their Fellowship) may be suspended or cancelled at any time in accordance with the discipline and misconduct measures contained in Paragraph 22 of the NTAA Constitution. In essence, Paragraph 22 of the NTAA Constitution empowers the Ethics Committee to hear and conduct enquiries for any charge laid against a member pursuant to the Constitution to determine whether the member has been guilty of misconduct. In broad terms, a member will be guilty of misconduct where they have not abided by the Constitution and by-laws, acted in a manner that may be regarded as dishonourable, is negligent in their professional duties or fails to comply with professional standards adopted by the Council. Following on from the above, it is therefore submitted that the Ethics Committee would be permitted to take action against a Fellow (i.e., approved auditor) who failed to conduct an audit of an SMSF in accordance with the Australian Auditing Standards. In particular, under Paragraph 18(g) and Rule 11 of the by-laws, a Fellow of the NTAA would be regarded as failing to comply with the professional standards adopted by the Council (and thus guilty of misconduct) where an audit of an SMSF was not conducted in accordance with the Australian Auditing Standards and competency standards. Some of the remedies available to the Ethics Committee in the event that a member is found guilty of misconduct include the following: the member may be expelled as a member of the NTAA; the membership of the member may be suspended for a period not exceeding 6 months; the Committee can prohibit any use by the member of any designation which the member is permitted to use pursuant to the Constitution; the Committee can give a direction that the member undertake a course of continuing education or professional development prescribed by the Committee; and in addition, to the other actions available to the Committee, they may order the member pay the costs of the Association in relation to laying and hearing the charge. As such, should an approved auditor be found to guilty of misconduct then the Ethics Committee have a number of remedies available (refer above). National Tax & Accountants Association Ltd. 15