Accountants and superannuation experts are concerned about the true implications of a three-paragraph policy in last week’s federal budget papers that’s designed to cut red tape for those with self-managed super funds.
Last Tuesday the government unveiled a policy to provide a “three-yearly audit cycle for some self-managed super funds”.
Pledging to “reduce red tape for SMSF trustees”, the measure is designed to change the auditing requirement for do-it-yourself super funds, from a compulsory annual audit to one every three years, provided the fund can show three consecutive years of clean audit history.
The idea could be seen as good news for the more than 1.1 million superannuation savers who run their own funds in Australia, but accounting experts are wary about the true implications of cutting red tape in this way.
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While the exact details of the policy are yet to be revealed, small businesses in the auditing space could be hit hard by the policy, with Paul Drum, head of policy at CPA Australia, telling SmartCompany he’s already hearing from businesses who say the move could cut their revenue “and the value of their businesses by two thirds overnight”.
There are a number of auditing professionals who specialise in the complex world of self-managed super reporting who could face an entirely changed landscape when it comes to what work is available, he says.
Meanwhile, it’s not clear whether less auditing oversight will actually help DIY super fund holders. As CPA Australia highlights, the budget measure doesn’t specify whether auditors would have to conduct a three-year audit of a super fund in one go, or conduct three individual audits and report these to the Australian Taxation Office in the third year in the cycle.
“An annual independent audit ensures any contraventions are identified, reported and rectified in a timely manner, providing an incentive to trustees to operate within the law,” Drum says.
Leaving things for three years could mean issues with a fund are picked up too late, Drum says. It could also mean the tax office only realises there is a compliance problem years after it actually happened.
CPA Australia says it has contacted the Treasury, Minister for Revenue and Financial Services Kelly O’Dwyer and the ATO to discuss the policy, but has not heard any further details.
The idea was met with cautious optimism by the SMSF Association, with chief executive John Maroney saying last week it is a positive step.
However, the association also observed independent auditing oversight is key to maintaining the integrity of the self-managed super system, and Maroney said last week he would “keenly await the implementation details of the proposal”.
SmartCompany has contacted the Minister for Revenue and Financial Services Kelly O’Dwyer for further clarification on the policy’s rollout.