Under the updated code, those firms that offer both non assurance and SMSF audit services to their SMSF clients to decide to offer one, or the other.
The independence standard also affects those firms that have a friendly accountant that sends SMSF auditing work their way. That’s because if one source of referrals is larger than 20 percent of the firms’ total fees, new guidelines indicate that you’re at risk of breeching independence requirements.
Since the code came into effect in January 2020, the ATO has been primarily focused on educating the industry. After July 1 however, stronger action will be undertaken on any suspected breech.
If found in breach of the independence standards as of July 1, the ATO has rights to refer the SMSF auditor to the Australian Securities and Investments Commission (ASIC) for further action.
How to make the decision on reformatting your accounting business.
If your firm is offering SMSF auditing services alongside non assurance services, you need to make a fairly big business decision on behalf of clients and staff.
Some considerations that may help to make this decision ‘black-and-white’ for you:
- Revenue: how much revenue can be attributed to SMSF audit services, or non-assurance services from the client?
- Service Preference: We know many accountants enjoy working with trustees and the relative simplicity of an SMSF Audit; where does your business offer the most value?
- Margin: How much profit can be attributed to SMSF Audit services compared with non-assurance services?
- Staffing: Will the decision to choose to focus solely on SMSF Auditing negatively affect the capacity amongst your team.
- Competition and Marketing: What’s the level of competition in your immediate area for SMSF audits, or non-assurance services. And which services are the most time consuming to close, or clients the hardest to attract.
Check out the ATO’s new website designed to provide guidance on the new SMSF Audit Independence Standards, launched this month and remember, Intello are available to coordinate a third-party SMSF Audit. For more information, call me.