The announcement of the replacement of the accountant’s exemption has grabbed much of this week’s headlines, but for SMSF approved auditors, the release of the ASIC registration requirements provided some much-needed guidance around minimum levels of competency and the costs of registration. For those auditing more than 20 funds, there was a reprieve from having to sit an exam, with this minimum number seen as the base competency level required continue to operate in sector. This direct pathway into the ASIC framework for some must come as a huge relief!! However, for those auditing less than 20 funds, the exam creates an interesting challenge for those who have previously ‘dabbled’ in the sector.
As you can see from the table below, published in the latest ATO SMSF Statistical Summary (2009-10), more than 50% of current approved auditors are going to need to sit a competency exam to continue to work as an approved auditor from 1 July 2013.
The issue here won’t be cost, with a $100 registration fee and a $50 ongoing fee when submitting their annual statement. For those that have to sit the exam, a further $100 fee will apply. Less than the cost of one audit (for most)!! The challenge will be whether many practitioners currently auditing SMSFs have the necessary skills around audit and SIS compliance to continue to operate in the new regulatory environment. Recent ATO research into SMSF auditors conducted by Colmar Brunton Social Research, showed a very high likelihood of the more than 11,000 auditors would move into the ASIC regime.
With registrations to start from 31 January 2013, many existing auditors (and aspiring approved auditors) need to think about getting themselves ready for the new framework from 1 July 2013. For those becoming serious about forging a career in the SMSF sector, the exam may just be the start moving into a specialist SMSF role.
What are your thoughts on the auditor requirements? Should everybody have been required to sit an exam? Is 20 funds too low? I’d love to hear your thoughts!!
Full details of the Minister’s announcement can be read here.
I think 20 is too low. This really only equates to about 60 hours a year. There is no way you can have a reasonable grasp on SIS & associated tax when you spend about 3.5% of your year doing it. 50 would have been a more realistic number, but I guess they wanted to have the bottom half sit the exam.
Its a no-brainer, anyone wishing to audit SMSFs in the future must be made to sit the audit competency exam, in order to give the ATO, & more importantly…….SMSF trustees, confidence, that auditors have sufficient knowledge & skills required, and can justify their audit fees. What is there to fear?
Passing an exam alone does not mean that you are equal to some one who does more than 50 funds – there should be categories – like level A means highly experienced etc…
this is distinguish the specialist for new NTAA members who have passed an exam after reading a book overnight
I also think 20 funds is too low, but making it higher is no guarantee that an auditor will actually do the audit work properly. I’ve worked in firms where the audit was done properly with less than 20 funds and others where almost no paperwork was done (other than signing the official audit statement) for a firm with more than 20 funds. I also outsourced my super admin and audit one year and the ‘independent’ auditor (for one of the biggest admin firms) signed off even though nearly every one of about 15 managed funds had been valued incorrectly, along with other significant errors (eg incorrect amounts claimed as tax deductions). I agree that registration is a step forward, but it will not necessarily stop some of the problems I’ve seen/encountered.
Jenni
You are soo right, whenever i find a huge contravention, i get requested to resign as an auditor (after payment offcourse) and the accountant / trustees find someone else who is either blind or cannot spell “SMSF” to sign the audit report.
I have seen a fund with equal balance in one year and then split to 90% to the spouse who turned 60 in the next year without ATO getting alarmed by the auditor.
I think ATO / ASIC need an exam which only “real auditors” can pass. Making the exam just a formality or only to deter a few will defeat the whole process. This is their chance to weed the rubbish out.
Spot on diysuperfund