spaa roadshow november 2013

The Auditor and the ATO

Jo HeighwayCEOENGAGE Super Auditswww.superfundauditors.com.au

THE AUDITOR & THE ATOSession Outline

The Auditor, the ATO and the Client

Auditor Reporting and ACRs

ATO findings on auditors and current concerns

ATO assistance for audit issues

The Big Picture – rectification & education

THE AUDITOR, THE ATO….& THE CLIENTClarifying relationships

An interesting poll…..Who do you work for?

“…an employee of the tax office”?!!!

THE AUDITOR, THE ATO….& THE CLIENTClarifying relationships

We engage with the SMSF trustees to provide our opinion on the financial statements and compliance with the SIS Act and Regulations

We need to be as independent of the tax office as we are of the Trustees and the referring partner- Law vs ATO opinion/guidance

Contract or engagement agreement with each referring partner

We have reporting obligations with the ATO

THE AUDITOR, THE ATO….& THE CLIENTClarifying relationships

o-operation

To build long-term relationships:

ommunicationC

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onsistency

ALM

AUDITOR REPORTING & ACRs

Management Letter to the Trustees

S.129 Notice to the Trustees

Audit Report (ATO approved form)

Auditor Contravention Report (ACR)

Management Letter to the referring partner?

www.superfundauditors.com.au

AUDITOR REPORTING & ACRs

AUDITOR REPORTING & ACRsRE: AUDIT MANAGEMENT LETTER / S129 NOTICE

 I wish to advise that the audit of the «Fund_Name» for the year ended 30 June 2013 has recently been completed.Auditors are encouraged by the Australian Taxation Office to issue a management letter at the completion of each audit, as a means of advising the Trustee of any matters noted during the course of the audit.In addition, in accordance with SIS s.129, I am obligated to advise you in writing of any contravention(s) detected. I wish to advise during the course of our audit I noted a reportable contravention(s) of the SIS Act and Regulations (detailed below). A copy of the Auditor Contravention Report (ACR) is attached for your information.  Matters noted during the course of my auditThe following issues were noted during the course of my audit which I would like to bring to your attention:

1/ Loan to Members – breach SISDetail facts of the eventAction RequiredDetail recommended course of action

AUDITOR REPORTING & ACRs

2013 ATO SMSF Approved Auditors report

Sections: 17A, 35A, 35B, 35C(2), 52(2)(d), 52(2)(e), 62, 65, 66, 67, 67A, 67B, 69-71E, 73-75, 80-85, 103, 104A, 109, 126K; and Regulations: 1.06 (9A), 4.09, 4.09A, 5.03, 5.08, 6.17, 7.04, 8.02B, 13.12, 13.13, 13.14, 13.18AA.

Reg 4.09A commenced 7/8/2012Reg 8.02B commenced 7/8/2012

AUDITOR REPORTING & ACRs

ACR reporting guidelines

• List of Reportable Sections

• Reporting Criteria

• Auditor judgement

• eSat – online ACR reporting tool

AUDITOR REPORTING & ACRsElectronic Superannuation Audit Tool (eSAT)

AUDITOR REPORTING & ACRsElectronic Superannuation Audit Tool (eSAT)

AUDITOR REPORTING & ACRsElectronic Superannuation Audit Tool (eSAT)

AUDITOR REPORTING & ACRsElectronic Superannuation Audit Tool (eSAT)

ATO FINDINGS & CONCERNS

The ATO’s major concerns re auditors include: Unqualified audit reports where ATO finds sig. breaches Auditing your own fund (or family) Insufficient (or non-existent) audit work-papers – no process No Trustee representation letters INDEPENDENCE Lack of knowledge/appropriate training

160 Auditors will be selected for the ATOs Audits of Auditors

ATO FINDINGS & CONCERNSCommon Problems with ACRs

Pedantic audit reporting (ignoring ATO thresholds) Reporting the incorrect provisions relevant to the event Breaches commonly reported incorrectly:

- Arms length (s.109 vs special income)- In-house asset test- Related Party loans- Legal Title – I recommend consistent policy

TELL the STORY! Even if you get the conclusion wrong, the information is still worthwhile.

ATO ASSISTANCE FOR AUDITORS

General Guidance 13 10 20

ATO P2P Program (top 300)

New eSat Project

Private Ruling (non-binding)ATO (Superannuation)PO Box 3100PENRITH NSW 2740

Enforceable Undertakings

ATO ASSISTANCE FOR AUDITORS

Enforceable UndertakingA written agreement between the trustees of an SMSF and the ATO. It outlines the steps the trustees will take to rectify a breach of the super laws.

This is appropriate to use once an ATO audit is underway in order to get the best possible outcome for the client.

During the Approved Auditors audit, the focus should be on reporting rectified events.

ATO ASSISTANCE FOR AUDITORS

SuperP2PEnquiries@ato.gov.au

THE BIG PICTURERectification & Education

Calm ClientsRectified ACRsLong term relationships (respect)Educated clients (accountant AND trustee)Reduction in ACR lodgement percentagesPro-active breach preventionNo ATO non-complying fund notices

Jo HeighwayENGAGE Super Audits

Central Coast NSWGold Coast QLD

** New Loyalty Program **2 free audit trial for attendees1300 283 487 (1300 AUDITS)

www.superfundauditors.com.au

DISCLAIMER© Jo Heighway, ENGAGE Super Audits 2013

This presentation is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. The presentation has been prepared without taking into account any personal objectives, financial situation or needs. It does not contain and is not to be taken as containing any securities advice or securities recommendation. 

Furthermore, it is not intended that it be relied on by recipients for the purpose of making investment decisions and is not a replacement of the requirement for individual research or professional tax advice. This presentation was accompanied by an oral presentation, and is not a complete record of the discussion held. No part of this presentation should be used elsewhere without prior consent from the author.