Call for new regulator for SMSFs

Nationwide accounting network accountantsRus has called for a new regulator for self-managed superannuation funds (SMSFs), saying the sector is now too large — and sophisticated — for the Australian Tax Office (ATO) to manage effectively.

accountantsRus chief executive Adrian Raftery said the ATO’s ineffective supervision of auditors and handling of recent changes to SMSFs’ ability to invest in instalment warrants are evidence it has lost control in the regulation of SMSFs in recent years.

“The [superannuation fund] industry is simply too big for the ATO to handle.”

According to Rafferty, the number of approved auditors for SMSFs is far too large, with most of these (70 per cent) reviewing less than five funds per year.

“The number of approved auditors for SMSFs should be limited to a small group of specialists to ensure that professional standards are maintained and knowledge gaps closed.”

He said that the large number of auditors reviewing fewer than five SMSFs per year raises concerns about how good a job they are able to do.

“It is difficult for these small auditors to remain abreast of complex superannuation regulations. How can they keep up-to-date, do the audit properly and also turn a profit. Something has to give in that equation.”

Raftery said he believes the ATO should revise the definition of ‘approved auditor’ to include only those who are registered with the Australian Securities and Investments Commission (ASIC).

Currently, members of Australia’s three major accounting bodies — the Association of Taxation and Management Accountants, the National Tax and Accountants Association and registered company auditors — and the auditor general are authorised to conduct SMSF audits.

“It’s a specialised area of accountancy and, as a result, requires specialists for the job,” Raftery said.

“We need to reduce the number of auditors doing only a handful of audits.”

According to Raftery, the ATO’s handling of last year’s changes to the law governing SMSFs and instalment warrants is another major area of concern.

In his view, these changes have spawned a plethora of products designed to entice SMSFs into purchasing properties with borrowed funds.

“This is wrong and goes against the intention of the SMSF legislation over the years,” he said.

“A strong regulator would keep abreast of these issues and act swiftly to protect the end user.”