The ATO and the Auditor

The Auditor and the ATO

Jo Heighway

ENGAGE Super Audits, Gold Coast

2www.superfundauditors.com.au

THE AUDITOR & THE ATO

Session 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 CLIENT

Clarifying relationships

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

“…an employee of the tax office”?!!!




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




o-operation

To build long-term relationships:

ommunicationC

C

C

C

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?





RE: 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 audit

The following issues were noted during the course of my audit which I would like to

bring to your attention:

1/ Loan to Members – breach SIS

Detail facts of the event

Action Required

Detail recommended course of action



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 7/8/2012

Reg 8.02B commenced 7/8/2012



ACR reporting guidelines

• List of Reportable Sections

• Reporting Criteria

• Auditor judgement

• eSat – online ACR reporting tool


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 & CONCERNS

Common 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 3100

PENRITH NSW 2740

Enforceable Undertakings



Enforceable Undertaking

A 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.



[email protected]


THE BIG PICTURE

Rectification & Education

Calm Clients

Rectified ACRs

Long term relationships (respect)

Educated clients (accountant AND trustee)

Reduction in ACR lodgement percentages

Pro-active breach prevention

No ATO non-complying fund notices

21

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.

Jo Heighway

ENGAGE Super Audits, Gold Coast

1300 283 487 (1300 AUDITS)

www.superfundauditors.com.au

Business

The ATO and the Auditor