SMSF Auditor Independence - APESB Guidance

The Accounting Professional & Ethical Standards Board (APESB) have released a new Independence Guide which makes it clear accountants can no longer assume the independence requirements do not apply for Self Managed Superannuation Funds. The new guidelines dispel the myth that APES 110 Code of Ethics for Professional Accountants (including independence standards) does not apply to SMSF audits clients because they fall within the 'small client' category. It is precisely this type of classification according to the guidelines, that has a direct impact on the type and significance of independence threats for a firm.

Can an SMSF firm still audit in-house?

The guidelines state that an auditor cannot audit an SMSF where the auditor, their staff or their firm has prepared the financial statements unless it is a routine or mechanical service. There can be no misunderstanding as to the nature of the guidelines intent about what constitutes a routine or mechanical service. The accounting firm would have to prove that the trustee provided a trial balance and associated accounts and had suitable skills knowledge and experience to prepare them and well as remaining responsible for their decisions as well as overseeing the audit service.

The independence guide also clarifies other independence questions including: reciprocal arrangements, situations where the auditor has one referral source, and long term arrangements over 10 years, and makes it clear that Chinese walls do not result in acceptable independence for SMSF audits.

The ATO continues to refer SMSF auditors to ASIC as a result of their focus on auditor independence. The ATO has always been concerned about the situation where the SMSF auditor is the registered tax agent is also involved in preparing accounts and statements for the SMSF's they audit.

The new guideline confirms that SMSF firms undertaking the audit and accounting function will no longer meet their obligations under professional standards and ethics. SMSF firms who provide both services and have long held the belief that there is no need to give up the SMSF audit should think about revisiting their business model.

Genuine SMSF audit independence provides your firm and trustees with impartial advice and professional judgement that helps accountants and trustees make the right decisions and delivers the best outcome for the accounting practice and trustees.

“Looking for a 100% independent, 100% based in Australia, CA qualified SMSF audit specialist team to assist you with your SMSF audits. EDM Super would love to share our expertise and wealth of both auditing and SMSF knowledge and provide your firm with genuine independent SMSF audits.”