As announced in the 2018 Budget, the Government has proposed a change to the annual audit requirement for SMSFs to a three-yearly cycle where an SMSF has a history of good record-keeping and compliance.
The proposal is effective from 1 July 2019, however, there have been no details released about the commencement date of the audit year from which it will apply.
We believe the annual audit of the financial statements and compliance for every SMSF is a cornerstone of the SMSF industry.
The ATO are clear in their view that ”approved SMSF auditors have a critical role in helping to maintain the health and integrity of the SMSF sector through the annual audit of each SMSF.”
If passed, this measure will set the SMSF industry back by significantly damaging the integrity of the SMSF sector as a result of the reduced oversight.
In addition, it will increase the compliance burden on the ATO and may result in inaccurate reporting of member balances and pensions. There is also an increased risk of revenue leakage as a result of incorrect reporting via the Annual Return.
Based on ATO statistics, the cost of an audit is less than 0.05% of average fund assets. Specialised audit firms and the adoption of technology by accountants are driving efficiency in the sector, providing a backbone of rigorous compliance at the same time as reducing these costs to trustees.
SMSFs control over 30% of the $2.3 trillion in total superannuation assets. With ongoing scrutiny on the regulation of the financial services sector and an increased reporting regime because of Super Reform, now is not the time to be risking the health and integrity of the SMSF sector.
For more information please contact us or speak with Richard Smith, Managing Director, ASF Audits on 08 8212 8710.