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:
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.
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.