ASIC has imposed conditions on the registration of 13 self-managed superannuation fund (SMSF) auditors and accepted voluntary cancellations of two SMSF auditors after independence concerns were raised.

The 15 SMSF auditors were referred to ASIC by the Australian Taxation Office (ATO) following a review of audit firms that undertook both accounting and auditing work for SMSF clients.

ASIC had concerns that financial statements for SMSF clients were prepared by the same firm that also conducted the SMSF audit, in breach of the SMSF auditor’s independence requirements.

ASIC Deputy Chair Sarah Court said, ‘Independence is fundamental to auditors to protect the integrity of the SMSF industry. SMSF auditors should carefully consider their structure and any services provided to audit clients to identify and evaluate independence. ASIC will take action where appropriate to reinforce the independence requirements.’

The conditions emphasise the restriction on performing in-house audits, require an independence review of all SMSF audit clients and notification of the conditions to their professional association.

One SMSF auditor has applied to the Administrative Appeals Tribunal for review of ASIC’s decision to impose conditions.

Background

Approved SMSF auditors are registered with ASIC under the Superannuation Industry (Supervision) Act 1993 (SIS Act) and must comply with the auditor independence requirements set out in APES 110 Code of Ethics for Professional Accountants (including Independence Standards). 

ASIC and the ATO co-regulate SMSF auditors. The ATO monitors SMSF auditor conduct and refers matters to ASIC. ASIC also monitors the SMSF auditor population for non-compliance and is empowered to disqualify, suspend, cancel or impose additional conditions on the registration of SMSF auditors.

ASIC may impose conditions on an SMSF auditor’s registration under section 128D of the SIS Act. SMSF auditors have the right to appeal decisions ASIC makes in relation to their registration.

Further information can be found on ASIC's website and in Regulatory Guide 243 Registration of self-managed superannuation fund auditors. SMSF trustees and members can check whether their auditor is registered, suspended or has conditions imposed on their registration by searching ASIC's SMSF Auditor register.

Editor's Note:

THE SMSF auditor that applied to the AAT to have ASIC's decision reviewed subsequently withdrew their application and the AAT dismissed the matter, effective from 29 May 2024.