Month: August 2017

Top 5 challenges of auditing SMSFs in 2017 – A huge rise in SMSF

There are now close to 600,000 SMSFs in operation and over 1.1million SMSF members. With this huge rise in SMSFs, the Australian Government’s policy changes are designed to ensure the sustainability, growth and flexibility of these funds. Here are the top 5 challenges of auditing SMSFs in 2017:

Events-based reporting

With the new events-based reporting set to streamline the flow of information to the ATO from 2018, any new income streams or changes to the fund will need to be reported within 28 days at the end of the quarter rather than on an annual basis. Although this doesn’t come in to effect now, all 2017 transactions will need to be reported in 2018, thus putting a lot of compliance burden on SMSF advisers. Also, firms will need to have automated processes in place.

Technological developments

Technology is having a huge impact on how we execute SMSF audits today. Audit process technologies enable auditors to conduct faster and high quality audits. Time saved via automating SMSF audit and admin processes can be utilised to get more clients and increase profitability. Smaller accounting firms might fail to stay profitable and keep up with the speed and efficiency versus firms equipped with advanced audit software.

The importance of independent audits

The Government relies on the SMSF annual audit to assess trustee compliance with the law and ensure that the integrity of the superannuation system is maintained. SMSF auditors will play a crucial role in the regulation of the SMSF sector. In fact, auditor role has now been stressed upon more than ever before. The ATO is increasing its focus on SMSF auditors who fail to meet key independent criteria.

The changing role of accounting firms

Changes in superannuation mean, accounting firms need to rethink their strategies in order to sustain in the long term in the field of SMSFs. Being accredited as specialist SMSF advisors through the SPAA (SMSF Professionals Association of Australia) or completing specialist courses should be seen as a minimum commitment on the part of accounting firms looking to be seen as serious about SMSF. It’s also crucial for accountants to obtain the appropriate licence in order to offer financial advice on SMSFs. This can help firms to continue expanding their revenue stream even further.

Disengaged SMSF trustees

With information and advice easily available on the internet, SMSF trustees have a lot of knowledge at hand and are making decisions based on that. While having the knowledge is a good thing, they might not necessarily have the specialist understanding needed to take SMSF decisions. One of the key challenges for advisers is to engage SMSF trustees with knowledge, insights and advice relevant to them.

Disruption is a natural course for any industry and change is inevitable. In order to fulfil their role in the SMSF world, auditors, advisers and accounting firms need to adapt and evolve faster than they think.

References 1. SMSF statistical report. March 2017.
Back to Insights

11 Reasons to move your accounting firm on the cloud for high growth

Australian accounting firms will witness a sea change in the coming 5 to 10 years. Cloud-based services and automation tools will disrupt the business model. It is imperative for every accounting firm to invest in advanced cloud-based systems sooner rather than later. Studies show that cloud based firms add five times the amount of clients compared with traditional firms, and report the highest growth. With the rapidly changing business environment, cloud technology allows your accounting firm to reinvent your way of work, evolve quicker and differentiate your service offerings. Here are 11 reasons why:

Accuracy

Cloud-based applications connect to external software and reduce the possibility of errors involved in manual feeds.

Enhanced security

Cloud systems have robust security protocols. They have much deeper pockets for firewalls and highly sophisticated intrusion prevention systems in place.

Cost savings

When you take into account the hardware, utility, software license, maintenance, and productivity costs, cloud subscriptions turn out to be more affordable. This is especially true for accounting firms who work with small and medium businesses. They also save time and improve the overall productivity of your firm.

Collaboration

Cloud-based platforms allow you to invite clients on online platforms. Allowing online access to clients is now more imperative than ever before – especially when it comes to offering SMSF-related advice. If you don’t, they will soon move to a firm who will.

No more maintenance headaches

Updates in software and hardware are done automatically. This means your systems are always up to date, and there’s no downtime due to system related issues.

Scalability

Cloud systems allow you to expand and grow faster without increasing immediate technology costs. It allows to upscale or downscale your existing resources as per your business needs.

Efficiency

Cloud technology allows to concentrate on your core competencies while leaving the task of running IT infrastructure to the cloud service providers.

Real time financial management

With accurate real-time data at your fingertips, firms can share the golden nuggets of information with your clients. This allows you to become your clients preferred adviser and increase revenue.

Flexibility

Cloud systems give you the flexibility to access your files and data even when you are off-site or at home. You and your employees can have a virtual office wherever they go through web-enabled devices.

Added value

Moving to cloud-based technologies allows you to automate low-value tasks. This helps you add real value to your clients business and create a certain stickiness to the client-firm relationship.

Robust Data Management System

Cloud technology has in-built off-site data management. Since all the data is stored in the cloud, it’s easy to have a backup or restore it. This also means, you can access any of the audit or accounting documents whenever you need them.

The cloud is here to stay and early adopters will benefit significantly in the long run. In order to survive and succeed in an automated future, accounting firms need to go beyond a service-oriented approach and start acting as advisers for their clients by deploying cloud technologies.

Back to Insights

5 Emerging trends in SMSF industry in 2017 – Good time to take stock

With the substantial changes to superannuation rules in action since July 2017, it’s a good time to take stock of the emerging trends in the SMSF industry.

Trend #1 Catering to a unique population

The superannuation population now consists of a really interesting and challenging age mix. The Baby Boomers, Generation Y and the Millennials. An aging and increasingly diverse community along with the current technological advances are bound to reshape the superannuation sector. Super funds will increasingly tailor their offerings to this new reality.

The millennial investors are more digitally savvy and happy to embrace automated investment advice compared with aged investors (60+). Studies also show that millennial investors are strong adopters of mobile apps and cloud-based technologies.

Trend #2 The age of Automation

Yet another emerging trend is the advent of automated processes and tools. Like any another industry, automation is bringing in significant change and efficiency in the way SMSFs are managed. Cloud-based technologies are automating a variety of cumbersome day-to-day processes.

Live reporting and greater visibility offer better decision making for trustees. Automated audit platforms are revolutionizing the way in which SMSF audits are conducted. These tools are saving auditors a significant amount of time and helping create high quality audits. Automation ensures a high level of accuracy, improves client experience and allows firms to improve their scalability.

Trend #3 The need for events-based reporting

The ATO is asking firms to notify them of some events 28 days after the month in which they happened and to notify them of other things 10 days after the end of the month in which they occurred. Increased events-based reporting means firms will need to have automated processes in place. Surprisingly, in a recent poll on the SMSF Adviser, only 23% of the accounting firms said that they were ready for ATO’s events-based reporting requirements.

Trend #4 The swing towards managed funds

The investor market seems to have an appetite for managed funds. Studies show that investors tend to have more faith in managed funds, as they provide more stability and confidence in a volatile world. While SMSF trustees are interested in investing in a diverse portfolio of funds, they don’t have enough time to select and research their SMSF.

The new Super reforms from July 1st limit the role of accountants – they can no longer provide SMSF advice to their investors without obtaining a license. This means, Advisers specializing in Managed Funds will benefit significantly. The SMSF space will also see new licensing requirements for accountants who want to provide more holistic advice to their SMSF clients.

Trend #5 Greater innovations for the future

With increased life expectancy, trustees look for a better control over their financial future. They are on the lookout for innovative strategies for the future. Real-time tools that offer personalized interaction with members through portable devices; the ability to make instant decision making strategies on a personal level; and a clear forecast on the returns. Trustees are also interested in innovative strategies/tools that spread awareness and demand engagement from an early age.

Some of the examples being cradle-to-grave products. In the age of information revolution, smart phones, cloud-based technologies and social media, 2017 will look for newer ways to bring in efficiency in SMSF investments, administration and audit – not just in the face of regulation but to meet consumer expectations for the future.

References:
1. BNP Paribas article March 2015 ‘2025: What will the superannuation industry look like in a decade?
2. Top 10 trends in the Australian wealth management industry
3. Investment Trends Survey Highlights

Disclaimer: The content provided on this blog is for information only. Cloudoffis cannot be held responsible for any loss incurred as a result of using information on this blog. Persons accessing this information are strongly encouraged to obtain appropriate professional advice before making any investment or financial decision.

Back to Insights