Early March, ASIC reported that it had identified 18 SMSF auditors who were involved in reciprocal audit arrangements, where each agreement involved two SMSF auditors who audited each other’s personal SMSFs.
The 18 auditors were referred to ASIC by the ATO for violating the independence requirements under the APES 110 Code of Ethics for Professional Accountants (APES 110).
Consequently, ASIC approved nine of the SMSF auditors’ voluntary cancellation requests while imposing extra limitations on the registration of the remaining nine.
ASIC warned: “It should now be clear to SMSF auditors that entering into reciprocal audit arrangements is an unacceptable breach of their independence requirements. ASIC will disqualify auditors for such breaches where appropriate,”
SMSF auditors should be on high alert after this move by ASIC.
With fee referral threshold recommendations also included in APES 110, many experts anticipated that this will be the next big focus for ASIC. Breaches of this threshold will almost certainly be next in line and it will impact many more auditors than the independence requirements.
If you need assistance with SMSF audit, then please drop ACSA a line.