The ATO and the Auditor

The Auditor and the ATO
Jo Heighway
ENGAGE Super Audits, Gold Coast

2www.superfundauditors.com.au
THE AUDITOR & THE ATO
Session Outline
 The Auditor, the ATO and the Client
 Auditor Reporting and ACRs
 ATO findings on auditors and current
concerns
 ATO assistance for audit issues
 The Big Picture – rectification & education

THE AUDITOR, THE ATO….& THE CLIENT
Clarifying relationships
An interesting poll…..
Who do you work for?
“…an employee of the tax office”
?!!!

 We engage with the SMSF trustees to provide our
opinion on the financial statements and compliance with
the SIS Act and Regulations
 We need to be as independent of the tax office as we
are of the Trustees and the referring partner
- Law vs ATO opinion/guidance
 Contract or engagement agreement with each referring
partner
 We have reporting obligations with the ATO

o-operation
To build long-term relationships:
ommunicationC
C
C
C
onsistency
ALM

AUDITOR REPORTING & ACRs
Management Letter to the Trustees
S.129 Notice to the Trustees
Audit Report (ATO approved form)
Auditor Contravention Report (ACR)
Management Letter to the referring partner?

RE: AUDIT MANAGEMENT LETTER / S129 NOTICE
I wish to advise that the audit of the «Fund_Name» for the year ended 30 June 2013 has
recently been completed.
Auditors are encouraged by the Australian Taxation Office to issue a management letter
at the completion of each audit, as a means of advising the Trustee of any matters noted
during the course of the audit.
In addition, in accordance with SIS s.129, I am obligated to advise you in writing of any
contravention(s) detected. I wish to advise during the course of our audit I noted a
reportable contravention(s) of the SIS Act and Regulations (detailed below). A copy of
the Auditor Contravention Report (ACR) is attached for your information.
Matters noted during the course of my audit
The following issues were noted during the course of my audit which I would like to
bring to your attention:
1/ Loan to Members – breach SIS
Detail facts of the event
Action Required
Detail recommended course of action

2013 ATO SMSF Approved Auditors report
Sections: 17A, 35A, 35B, 35C(2), 52(2)(d),
52(2)(e), 62, 65, 66, 67, 67A, 67B, 69-71E, 73-75,
80-85, 103, 104A, 109, 126K; and
Regulations: 1.06 (9A), 4.09, 4.09A, 5.03, 5.08,
6.17, 7.04, 8.02B, 13.12, 13.13, 13.14, 13.18AA.
Reg 4.09A commenced 7/8/2012
Reg 8.02B commenced 7/8/2012

ACR reporting guidelines
• List of Reportable Sections
• Reporting Criteria
• Auditor judgement
• eSat – online ACR reporting tool

AUDITOR REPORTING & ACRsElectronic Superannuation Audit Tool (eSAT)

ATO FINDINGS & CONCERNS
The ATO’s major concerns re auditors include:
 Unqualified audit reports where ATO finds sig. breaches
 Auditing your own fund (or family)
 Insufficient (or non-existent) audit work-papers – no process
 No Trustee representation letters
 INDEPENDENCE
 Lack of knowledge/appropriate training
160 Auditors will be selected for the ATOs Audits of Auditors

ATO FINDINGS & CONCERNS
Common Problems with ACRs
 Pedantic audit reporting (ignoring ATO thresholds)
 Reporting the incorrect provisions relevant to the event
 Breaches commonly reported incorrectly:
- Arms length (s.109 vs special income)
- In-house asset test
- Related Party loans
- Legal Title – I recommend consistent policy
TELL the STORY!
Even if you get the conclusion wrong, the information is still worthwhile.

ATO ASSISTANCE FOR AUDITORS
General Guidance 13 10 20
ATO P2P Program (top 300)
New eSat Project
Private Ruling (non-binding)
ATO (Superannuation)
PO Box 3100
PENRITH NSW 2740
Enforceable Undertakings

Enforceable Undertaking
A written agreement between the trustees of an SMSF and the
ATO. It outlines the steps the trustees will take to rectify a
breach of the super laws.
This is appropriate to use once an ATO audit is underway in
order to get the best possible outcome for the client.
During the Approved Auditors audit, the focus should be on
reporting rectified events.

SuperP2PEnquiries@ato.gov.au

THE BIG PICTURE
Rectification & Education
Calm Clients
Rectified ACRs
Long term relationships (respect)
Educated clients (accountant AND trustee)
Reduction in ACR lodgement percentages
Pro-active breach prevention
No ATO non-complying fund notices

21
DISCLAIMER
© Jo Heighway, ENGAGE Super Audits 2013
This presentation is for general information only. Every effort has been made to ensure
that it is accurate, however it is not intended to be a complete description of the matters
described. The presentation has been prepared without taking into account any personal
objectives, financial situation or needs. It does not contain and is not to be taken as
containing any securities advice or securities recommendation.
Furthermore, it is not intended that it be relied on by recipients for the purpose of making
investment decisions and is not a replacement of the requirement for individual research
or professional tax advice. This presentation was accompanied by an oral presentation,
and is not a complete record of the discussion held. No part of this presentation should be
used elsewhere without prior consent from the author.

Jo Heighway
ENGAGE Super Audits, Gold Coast
1300 283 487 (1300 AUDITS)
www.superfundauditors.com.au

The ATO and the Auditor

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