SMSFA questions three-year audits

The SMSF Association has cast doubts over the proposed three-year audit cycle for some self-managed super funds, stating the change may "undermine" the integrity of the sector.

SMSFA chief executive John Maroney said the shift to three-year audits would not result in significant costs savings for trustees and may pose "potential integrity risks."

"We believe any cost reductions for SMSFs trustees would not be substantial and would not justify the increased complexity and potential integrity risks for individual SMSFs as well as the broader sector.

"We also believe that there may not be a significant take-up of the proposed triennial audit by SMSF trustees as our research has shown that many SMSF advisers may recommend that their clients undertake annual audits to ensure their fund is compliant," Maroney said.

The Federal Government proposed the new auditing rule in this year's Budget.

In response to Treasury's discussion paper, Maroney urged the Government should reconsider introducing the proposal.

The submission highlighted concerns that reducing independent oversight could potentially "undermine the integrity of the SMSF sector" and minor compliance breaches may become more difficult to rectify.

The change may also impact SMSF audit businesses and make the current compliance system for SMSFs more complicated. This would outweigh any red-tape reduced by three-year audits, it said.

A survey of the association's members revealed 89% opposed three-year audits, while 86% believed it would not reduce costs.

Further, 84% said they would recommend their clients continue having annual audits and not make use of the proposal.

Maroney said if the proposal goes ahead, the association strongly suggests that it considers a simplified, principles-based eligibility test and requires SMSFs using a three-year audit cycle to have a "light-touch" compliance check in the non-audit years.

Read more: SMSF AssociationJohn Maroney
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