Recent amendments to the rules around auditor independence will be a key legislative theme at this year’s SMSF Association National Conference according to the representative body’s deputy CEO and director of policy and education, Peter Burgess.
The conference will continue a tradition of “stocktaking” proposed and actual legislative changes relating to SMSF administration and advice, Burgess explains. Issues like the proposal to increase maximum SMSF membership from four to six members and changes to non-concessional bring forward rules for 65 and 66 year olds are both topical, he says, but no issue is more front of mind for those involved than auditor independence right now.
“In the past accounting firms have been able to prepare the financial statements and audits for SMSFs by setting up Chinese walls; one partner is responsible for financials and another for auditing,” he explains. “The Accounting Professional Ethics and Standards Board recently issued new guidelines for auditor independence, so now the only time the accounting firms can do both is when it’s routine and mechanical, just data entry.”
Burgess says the proposed change is intended to bring the industry in line with global trends as there has been a push worldwide for auditor independence. The SMSF doesn’t necessarily oppose the changes, he adds, but they would like the Australian Tax Office – which will police the new rule – to give service providers and advisers more breathing room to adopt the changes.
“We’re comfortable with it but what we have been calling for is a longer transition period. We want to give the industry plenty of time,” he says. “The ATO aren’t applying any resources to check firms are doing it this financial year but they will take a firmer approach next financial year. We’ve asked for that to be extended another 12 months.”
Burgess says the industry is also lobbying for more clarification around the changes, in particular which type of arrangements will still be allowed and what kind of outsourcing arrangements will need to be made. “Not everyone agrees there is even a need to tighten the rules,” he adds.
The ATO has agreed to issue further guidance on the issue, he advises, and will be presenting on the topic at the SMSF Association’s National Conference in February, held from the 16th to the 18th of February. For more information, visit the event site here.