Christine St Anne: I'm at the BT Financial Group's office and I just spoke to Bryan Ashenden, who will be speaking at an upcoming SMSF Trustee Day. He talks to us about the new audit requirements for trustees.
What is the deadline for selecting an auditor?
Bryan Ashenden: There is one true dead line, which is talking about at least 45 days before you do lodge your reports for that fund for the year. I think what's probably more important is not just think about that as the deadline. I think as you talk about how you run an operator fund throughout the year, there may be times depending on, what is that you are looking to do? You want seek some guidance or some support. And so having your auditor in place beforehand can actually assist you in that. So you can talk to them about this is what we are looking to do. Did I see any issues? Did I see any concerns with it? So you can address those things upfront rather waiting for them to provide an opinion at the end of the day.
What do trustees need to look for when choosing an auditor?
There is now requirement essentially from the 1st of July this year that the auditor needs to be an approved auditor. So, that's really the first thing that people will need to look for. And what that means from an auditor's perspective is that they have registered themselves with the regulator, which is ASIC in this situation.
You're also probably looking to see, what sort of qualifications do they have? For examples, have they completed a specialist qualification around auditing in self-managed superannuation funds? Are they a member of a professional body? And some of the really simple questions like, how many other funds do they audit? Is it someone that is very, very experienced in this space? Or is it someone that might audit five funds a year and then perhaps he isn't as on top of the issues, as a really experienced auditor might be.
What information do they need to provide?
So the auditor's requirement here really is, they need to sign off on a couple of things. So, as a minimum, funds are required to produce an operating statement and effectively a statement of the financial position, so what are the assets, the liabilities and so on. So that's the minimum sort of things that would be provided. And it's not that the trustees themselves will gather and collate all of that information, that's using an administrator, is often where they can come into a system, making sure that all those documents are prepared correctly and they have been handed over the auditor.
But it's also that showing from the auditor's perspective, have the trustees done all the things that they need to throughout the year. So things such as do they have minutes in place, to show that they have considered their investment strategy, that they have considered insurance, which is an important requirement these days of investment strategy. So, evidence that they are complying with the legal requirements as a trustee and their duties throughout the year, because an auditor needs to provide an opinion on that as to whether they believe the fund has met its obligations or has potentially breached some obligation.
What is an SMSF auditor number?
A self-managed super fund's auditor number. What this really is now is, actually it's the proof that the person who does the audit of the fund has appropriately registered with the regulator. So that they are showing they have got the relevant experience, the relevant qualifications and accreditation to do these sort of work and it's really, really important. This is part of this new requirement that came in from the July 1, 2013 and where it becomes really important is that number actually gets filled in on the fund's tax return when it gets lodged with the ATO. So if a fund lodges its tax return and doesn't have their audit number in there, essentially again the trustees aren't meeting their obligations. So it's – we feel like it's the identifier to say that, yes, we have an appropriate person who is auditing the fund.
Would your auditor be accountable for any breaches?
It's a really good question. Of course, we never want any breaches to happen and getting the right experience and having the right people support you throughout the process, should may – that that doesn't happen and that's going to be, whether it's with the administrator with the financial planner or a lawyer, depending on really what trustees are looking at.
In terms of those sorts of breaches, there are certain responsibilities on auditors if they hold themselves out as having this appropriate qualification and they don't, they can get penalized, but that's more of an administrative penalty coming direct from the ATO, saying where the auditor hasn't done the wrong thing.
Where you are probably looking from a trustee perspective, again is, trustees themselves assume a lot of responsibilities and as much as I can contract with someone like an auditor, an accountant, a financial planner to assist them through the process, trustees generally still retain the full responsibility. If however you get to a situation where an auditor perhaps should have picked something up and hasn't and therefore hasn't reported it, or brought it to the attention of the trustees that's probably the question about do the trustees have any rights against the auditors themselves and there is nothing in the legislation that really backs that up.