“Let it go, let it go……”
In May 2020, the updated code of ethics provided clear guidelines about auditor independence.
You have till June 2021 to get your house in order. After that you are fair game for the ATO and your professional body.
Yet recent research shows that 54% of all accountants have not made any plans to separate the administration and auditing functions.
To some extent that is understandable. 2020 was a momentous year and change is hard.
Yet there is one myth that needs debunking. That outsourcing audits will cost you money.
It might cost you revenue but in the work we have done with accountants, it has led to greater profits, a stronger relationship with clients, and lower risk.
✓ Clients like it
In an era of transparency, clients like genuine independence. They feel that their SMSFs are better protected. Which is good for your brand reputation.
✓ You play good cop
It enables the accountant to play “good cop”. Changes that need to be made are at the behest of the “bad cop” auditor.
✓ Lower admin costs
“Bad cops” mean SMSFs become more compliant over time. Which saves a lot of your internal time chasing clients. For some of the funds we audit, accounting firms have saved up to 14% of the time they used to spend on admin.
✓ Many accountants prefer other work
Bizarre but I have heard it enough times to accept it. People are more productive and happier doing work they enjoy.
✓ Lower PI insurance costs
PI insurance costs are rising for our industry. Some accounting firms have experienced price increases of 35-165%. Stop SMSF audits and your bill goes down.
✓ Litigation risks are rising
The ATO and courts are placing ever higher obligations on auditors. There is also increasing litigation against auditors and large costs being awarded against them.
✓ ATO penalties
The ATO will be hot on this and their data matching capabilities are very powerful. Get caught and the penalties and fines will probably wipe any profit you have made from SMSF audits over the past few years.
✓ Professional body audits
However, compared to your professional bodies the ATO are pussycats. If you are suspected of being in breach, a professional body audit will suck up a week of your firm’s time. And they will charge you for the privilege.
If in actual breach you will have remediation work, and a second audit. Which you will have to pay for again.
✓ Still charge fees
Remediation for non-compliant funds and add on fees for audits mean that you can still earn income from the flow-on work from independent audits.
Let it go……