SMSF audit independence – the time to act is now!
Daria Galstyan CA, Associate Director – Audit at Evolv, urges accounting firms to act now to prepare for SMSF audit independence requirements that come into force on 1 July 2021.
In the second half of 2020, Evolv recorded a 60% year-on-year rise in the take-up of its Evolv Black SMSF audit service as accounting firms take proactive steps to prepare for 1 July 2021.
It’s a figure that suggests accountants are planning ahead for the new SMSF audit independence requirements rather than risk disciplinary action by ASIC. But according to Daria, some firms are delaying the inevitable – but time is fast running out.
“There can be a variety of reasons why accountants haven’t yet formalised a relationship with an auditor for their SMSF clients,” explains Daria. “Some may be in consultation with the Australian Taxation Office (ATO) to know if a re-structure offers a solution to the independence requirements. Nonetheless, there are accounting firms that simply aren’t maintaining a pro-active approach.”
With less than six months remaining to 1 July 2021, accountants need to research which firms can provide true SMSF audit independence, then go to market to compare audit quality and pricing and make an assessment on reputation. As Daria notes, “Accountants need to start acting now.”
What to look for
In the search for a truly independent SMSF audit service, Daria advises accountants to address several key issues.
She says, “It’s important to be sure the firm you are engaging has a good reputation. Rapid turnaround times matter too because clients want their financial affairs sorted quickly. This is where Evolv really stands out. Our large team of support staff allow us to deliver a prompt audit service.”
Focus on compliance quality
Daria notes that accountants also need to be mindful of an audit firm’s approach to compliance.
“We see a lot of smaller firms offering SMSF audits, but they don’t always have the necessary depth of compliance knowledge, and this can see clients missing out.
“With 16 years’ experience in this industry, I know just how critical it is for an audit service to address compliance matters, and ensure that an SMSF is compliant,” adds Daria. “This has really come to the fore in recent years when the ATO has been very active among SMSFs, with a particular eye on compliance.
Consider an auditor’s capacity
Another factor to evaluate is an audit firm’s ability to handle large volumes of SMSF audits. It’s an area where Daria believes accountants could encounter limited capacity.
She notes, “Accounting firms with a high number of SMSF clients may face challenges finding an SMSF auditor that ticks the box for capacity – particularly if they leave the hunt too late.
“As a large and highly reputable firm, Evolv not only has a large and highly skilled audit team in place, we have a competitive advantage when it comes to attracting additional professional staff if needed.”
Take action now
Daria sums up the need for early action saying, “It’s not just about having a SMSF auditor lined up for 1 July,” explains Daria. “All auditors have an onboarding process, and accountants need to provide audited prior year figures, and of course, SMSF clients need to be informed that their fund is being moved to a new auditor.
“All this takes time, and it must be achieved amid the normal workload of a busy practice. My advice to accountants is to take action during January and February, and have an auditor in place by March 2021.
To learn more about how Evolv can help your practice meet SMSF audit requirements, contact David Goldsmith at Evolv on firstname.lastname@example.org.