SMSF Association submission on three yearly audit cycle for some self-managed superannuation funds

SMSF Association submission on three yearly audit cycle for some self-managed superannuation funds

31 August 2018

The SMSF Association (SMSFA) welcomes the opportunity to make a submission on Treasury’s discussion paper “Three-yearly audit cycle for some self-managed superannuation funds”. We are pleased Treasury has undertaken an extensive consultation because the potential implications of the proposal are significant for the SMSF sector.

The key points made in this submission are:

  • The proposal is unlikely to result in a significant cost reduction for eligible SMSFs.
  • Take-up of the option to have a three-year audit may not be substantial and may not deliver benefits across the sector.
  • There are also legitimate concerns that reducing independent oversight will potentially damage the integrity of the SMSF sector and minor compliance breaches may become more difficult to rectify.
  • The proposal will impact SMSF audit businesses and may reduce the quality of the SMSF audit workforce, affecting the quality of independent oversight of the SMSF sector.
  • Unfortunately, due to the nature of compliance data, ATO statistics are not a true indication of the role auditors play in resolving potential issues and maintaining the integrity in the SMSF sector.
  • Eligibility criteria using “triggers” to require annual audits may make the current compliance system for SMSFs more complicated and outweigh any red-tape reduced by three-year audits.
  • An appropriate transition to three-year audits is needed if the proposal is to be implemented.
  • We recommend that the Government consider amending existing SMSF audit requirements to streamline the SMSF audit process which will assist in reducing audit costs for SMSF trustees as an alternative to this proposal.
  • If the Government does choose to proceed with the proposal then we strongly suggest that it considers a simplified, principles-based eligibility test and requires SMSFs that are using a three-year audit cycle to have a light touch compliance check style audit in the non-audit years.

Click here to read our full submission.