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Webinar - The Spotlight on SMSF Auditors


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Presentation slides from webinar conducted by The SMSF Academy on 14 November 2011.

Hosted by Aaron Dunn, with guest panelist, Jo Heighway from Engage Super.

Published in: Economy & Finance, Business
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Webinar - The Spotlight on SMSF Auditors

  1. 1. The Spotlight on SMSF Auditors Webinar: Monday, 14th November 2011
  2. 2. Housekeeping Housekeeping• Attendees are muted for the session• Presentation slides available in Training Materials page • Refer to registration link• You can type questions to the presenter(s) from your screen• Webinar recording will be available through The SMSF Academy website after the session
  3. 3. In today’s session… Today’s Session • The current state of play • The growing problem of ECT • Cooper’s spotlight on auditors • Stronger Super – the industry speaks • Auditors + Independence = APES 110 • Auditor registration, are you ready? • The Decision Process moving • forward ENGAGE! A bit about
  4. 4. Guest PanelistGuest PanellistJo Heighway, ENGAGE Super Audits ENGAGE Super Audits is an online provider of independent SMSF audit services Australia-wide. Jo is the founder and CEO, and is trusted by many of the best administrators as their audit provider. Jo is a Chartered Accountant, SSATM and SSAud®, and has been auditing SMSFs since beginning her career in the super audit division of Deloitte back in 1995 at the ripe old age of 17. Jo’s passion for the SMSF audit industry saw her recently named Telstra NSW Young Business Woman of the Year.
  5. 5. Interactive Poll #1Interactive Poll #1Question:How many audits do you or yourbusiness currently complete eachyear?
  6. 6. The Spotlight on SMSF Auditors“The work of approved auditors is fundamental to thehealth of the SMSF market.Approved auditors play an important role on behalf ofthe community.So naturally were keen to support an increasinglycompetent auditing profession”.Stuart Forsyth, Assistant Commissioner Superannuation There is a small window of opportunity before auditor registration takes effect. Now is the time to plan and take action.
  7. 7. The Current State of PlayThe following professional requirementsapply NOW and will CONTINUE to apply:• Approved Auditor• Competency Requirements for Auditors of SMSF’s• Australian Auditing Standards• APES110• Revised GS009 is now available, guidance statement issued by AuASB on Auditing SMSFs• ICAA Independence Guide for SMSF Auditors (updated version expected)
  8. 8. The Current State of PlayThe ATO’s 2011-12 compliance program forapproved auditors incorporates 3,900 plannedactivities! Targets include:• High-risk auditors (not identifying significant contraventions)• Serious breaches of independence requirements• Limited or no evidence of an audit being maintained by auditors (300 cases)• Low-volume auditors• Low cost auditors• Auditors who fail to satisfy their personal tax obligations• Field reviews of internal controls of practices that perform over 300 SMSF audits annually* Planning opportunity – in or out?
  9. 9. The Cooper Review’sHousekeeping Spotlight on Auditors Cooper Review Statistics on SMSF Auditors• 11,500 approved auditors undertaking SMSF audits• Auditors on average completed 35 audits each• 51% of auditors completed less than 5 audits (3% oftotal funds)• Only 2% of auditors conducted more than 250 audits• 4.3% of audits done by auditors who weren’tmembers of the 3 professional accounting bodies• Audit fees decline based on scale (number of audits)and specialisation* planning opportunity
  10. 10. The Cooper Review’s Spotlight on Auditors“The SMSF regulatory framework is heavily relianton approved auditors, however the approvedauditor population has no minimum, consistentlypoliced, competency and independence standards”.The proposed solution:• Registration of approved auditors (with ASIC)• ATO to police the approved auditor standards• Linking registration requirements to ongoing minimum competency and independence standards .
  11. 11. Stronger Super – Industry Consultation• Main points of contention: - competency exams - mandatory outsourcing• Independence Following industry consultation, there will be no “mandatory outsourcing”. Instead APES 110 will be a legislative requirement for all SMSF auditors as part of their ASIC registration.• Auditor Registration Auditors WILL be registered with ASIC. Announcement from Government expected any day (?!) on this.
  12. 12. Auditors + Independence = APES 110• APES 110 is the current standard for independence for SMSF audit engagements• Independence comprises of both independence of mind and independence of appearance. QUESTION: would your client consider your current arrangement is “independent”?
  13. 13. Auditors + Independence = APES 110EXAMPLES - When independence is or is likely to be impaired:• Auditing your own fund• Auditing the SMSF of a relative• Auditing the SMSF of a partner within your own firm• Auditing an SMSF where your firm provides financial planning advice to the SMSF• Auditing the SMSF where you have prepared the books• Having at least 2 partners in a firm sign off each other’s work, where there are not appropriate safeguards in place such as totally separate accounting and audit reporting lines and teams
  14. 14. Auditors + Independence = APES 110 When independence is or is likely to be impaired (cont’d):• Two firms swapping clients to conduct audits – factors such as relying on each other for revenue, a need to ensure an ongoing relationship, pressure for unqualified audit opinions or other factors may result in independence being impaired• Outsourcing arrangements where a significant portion of the auditor’s fees come from the one referral source• Auditing the SMSF of a significant client of the firm• Auditing an SMSF where the firm has invested the Trustee’s money in entities related to the firm * Planning Opportunity – proactive Rectification, or Specialise to meet demand
  15. 15. Auditors + Independence = APES 110 If in doubt, outsource. “Ultimately, if independence cannot be assured, then the auditengagement must be declined. This principle applies regardless of thecost to the firm, how simple the SMSF might be, how much your client might object, or even when you know for a fact that the SMSF has complied with all its obligations”. Liz Westover, Head of Superannuation ICAA
  16. 16. Auditor Registration…are you ready?There WILL be a competency exam as well asexperience requirements, police checks etc. New auditors (entering the profession after 1July 2012) – experience component + competencytest Existing auditors – transitional arrangementswill apply (to qualify must have completed aminimum number of audits within the 12mthsprior to 1 July 2012).* Planning Opportunity!Annual renewal will require ongoing experienceand confirmation of independence.
  17. 17. The Decision Process moving forward….. What does it all mean for you? It is projected that there will be a 50% reduction in SMSF auditors solely due to the requirement to register with ASIC.The Opportunities• Are you In? – Plan to qualify as an existing auditor – Specialise to benefit from the demand for outsourcing• On the fence? – Much clearer independence guidelines from the professional bodies• Are you Out? – Pro-active rectification – Act quick to secure an independent auditor before demand spikes
  18. 18. The Decision Process moving forward….. What does it all mean for you?The Threats• ASIC registration – meeting entry requirements• Increased ATO policing activity• ASIC powers (yet to be announced)• Expect A LOT more scrutiny from the professional bodies - CPD reviews, quality control reviews, and targeted education• Costs of registration – initial and ongoing• High demand for outsourcing• Small firms less likely to comply with APES110• Succession Planning – are we heading for a repeat of the registered company auditor crisis?
  19. 19. Interactive Poll #2Interactive Poll #2Question:As a result of these Stronger Superreforms, what is going to have thegreatest impact on your business?
  20. 20. The Decision Process moving forward….. What does it all mean for you?Let’s Talk about the “F” Word ……Fees! The #1 concern for accountants considering outsourcing is Loss of Gross Fee Revenue So will audit fees rise or fall??
  21. 21. The Challenge is on!“It is now up to the SMSF audit profession to ensure itmeets it’s obligations for independence with integrityand professionalism.The Government has supported the existing code ofethics by determining that it should be adhered to byall SMSF auditors. The profession must now provethat this was the right decision”. Liz Westover, head of superannuation ICAA
  22. 22. ENGAGE Super Audits• Online SMSF Audit Service available Australia-wide• Audits performed by local, supervised, qualified audit specialists• Well established company with a reputation for high quality, reliability, superior turnaround and support• The leaders in SMSF audit technology Just call 1300 AUDITS, it’s that easy!
  23. 23. Next Webinar• Members – Free*• Non Members - $77 (inc. GST)• SPAA & FPA points to be issued for attendees (where requested)* Refer to member resource library for further detailsWhat we will be covering in the webinar:• Important considerations when structuring a pension• Impact of TR 2011/D3 – when a pension commences and ceases• Segregation and Exempt Current Pension Income (ECPI) issues• Case studies to demonstrate strategies and highlight issues• Tips, and traps when establishing and running pensions Special Offer (Promo code – TSAAUDIT): Non-Members - register for next webinar for just $55 (inc. GST), that’s a 29% saving on standard rate
  24. 24. Thank Please complete the T: 1300 AUDITS short survey when E: exiting this session