With the assistance of several tip offs from the Australian Taxation Office, ASIC is cracking down on SMSF auditors.
ASIC has reported that it has recently imposed penalties upon a number SMSF auditors ranging from disqualification and suspension to the imposition of practice conditions.
Disqualification was an obvious penalty for the auditor who had been plying his trade even though he was bankrupt.
The other penalties are more reflective of the quality of work. Examples of the failings which ASIC had zeroed in on included: -
auditing the ownership and valuation of fund assets;
determining whether transactions were on an arm’s-length basis;
maintaining auditor independence;
issuing audit reports in the incorrect form; and
failing to obtain signed financial statements.
Those auditors whom ASIC had penalised found themselves subjected to peer reviews, independence audits, restricted audits, increased education and examinations.
The Australian Taxation Office and ASIC are keeping a close eye on SMSF auditors and the quality of their work. Deficiencies are attracting penalties. And SMSF auditors should not assume that their professional indemnity insurance policies will respond to the consequences of any deficiencies.