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
Financial Services Minister, Stephen Jones, has assured the cost and time to enter the financial advice profession will soon be halved, as shadow treasurer Angus Taylor pledges to reach 30,000 advisers.
The positive results of the latest financial adviser exam have helped the advice profession reach 15,600 yet again, according to Wealth Data analysis.
Financial advice firms have told Adviser Ratings they are planning to increase their compliance spend by almost a third, including on enhancements to their cyber security which ASIC has identified as an enforcement priority.
The digital advice platform is officially launching into the financial advice sector, offering up its services to practices as a means of engaging with the next generation of clients.
