The tax office has emphasised it is focusing on audit quality from approved auditors of self-managed superannuation funds (SMSF) and to achieve this has stressed the importance of having the auditors cooperate with the regulator.
In its latest SMSF newsletter, the Australian Taxation Office (ATO) referred to a recent case it had against an auditor to illustrate the point.
In the aforementioned proceedings, the regulator established that a particular SMSF had breached the in-house asset rules of the Superannuation Industry Supervision (SIS) Act by exceeding the in-house asset limit legally allowed.
However, the approved auditor of the fund did not recognise the offending investment as an in-house asset and subsequently failed to include it in the auditor contravention report.
With no assistance from the auditor to rectify the situation, the ATO instigated legal action.
“We prosecuted the auditor because they failed to work with us – not returning phone messages or responding to the audit notification. We eventually issued a notice under section 255 of the SIS Act, asking for audit documentation, which the auditor failed to appropriately respond to. The auditor pleaded guilty and was convicted and fined $1200,” the ATO said.
“As a result of this behaviour and other issues with the auditor’s compliance as a business and employer, the auditor was found to not be a fit and proper person and was disqualified from being an approved auditor of a regulated super entity in accordance with subsection 131(1) of the SIS Act.”
The warning coincides with notification from the ATO about a proposed change to the process governing the appointment of an SMSF auditor.
Under the recommendation, as of 1 July 2013 an SMSF auditor will need to be appointed no later than 45 days prior to when the SMSF annual return needs to be lodged.
Currently the SMSF auditor has to be appointed 30 days before the audit report is due.
“This change will ensure that the prescribed period for the appointment of an auditor does not vary if the prescribed period which the auditor must give their report is extended,” the ATO said.
By: Darin Tyson-Chan