Trustees warned against switching auditors

Trustees warned against switching auditors

Changing auditors after a breach has been detected will do nothing to prevent a notice of non-compliance and, in some cases, could lead to harsher penalties, the ATO has warned SMSF trustees.

ATO assistant commissioner Kasey Macfarlane has stressed the importance of trustees working with their auditor on a plan to rectify the issue.

Ms Macfarlane said she has heard of situations where a registered auditor has indicated to a trustee or their client that there is a contravention and that they will have to report it to the ATO. The auditor, she said, has then found that their services have been disengaged and the trustee has gone to look for another auditor.

 

“Breaking up with your auditor doesn’t really help anything at all. Number one, that auditor, although they are no longer engaged, once they’ve detected that breach they’re still obligated to report it to us, so we’re still going to know about it,” said Ms Macfarlane.

“That sort of behaviour just doesn’t demonstrate to us that there has been a change in behaviour or recognition of inappropriate behaviour and so our compliance action may well be stronger in those types of cases.”

Trustees, she said, need to see their auditor as their friend, and that in most instances the ATO understands the contravention is not deliberate.

She also announced that the ATO is developing an “early engagement and voluntary disclosure model” for all SMSF trustees to use.

“Although the whole model hasn’t yet been finalised, there is an email address trustees can send their issues through to us, their voluntary disclosures, and we will make sure that gets through to the appropriate person with the appropriate level of knowledge to address that,” she said.

“I do want to emphasise though that process and that email box, it’s not like going to confessional where you just tell the ATO all of your issues and all of your problems and think, 'well, that’s now fixed'.”

Ms Macfarlane said it’s important trustees are working with their adviser and auditor to put in place a plan to rectify this issue and then informing the ATO through the process not just about the issue but how it is being rectified.

Trustees warned against switching auditors
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