Presentation slides from webinar conducted by The SMSF Academy on 14 November 2011. Hosted by Aaron Dunn, with guest panelist, Jo Heighway from Engage Super.

1. The Spotlight on SMSF Auditors
Webinar:
Monday, 14th November 2011

2. Housekeeping Housekeeping
• Attendees are muted for the session
• Presentation slides available in
Training Materials page
• Refer to registration link
• You can type questions to the
presenter(s) from your screen
• Webinar recording will be available
through The SMSF Academy website
after the session

3. In today’s session…
Today’s Session
• The current state of play
• The growing problem of ECT
• Cooper’s spotlight on auditors
• Stronger Super – the industry speaks
• Auditors + Independence = APES 110
• Auditor registration, are you ready?
• The Decision Process moving
• forward ENGAGE!
A bit about

4. Guest Panelist
Guest Panellist
Jo Heighway, ENGAGE Super Audits
ENGAGE Super Audits is an online provider of independent
SMSF audit services Australia-wide.
Jo is the founder and CEO, and is trusted by many of the best
administrators as their audit provider.
Jo is a Chartered Accountant, SSATM and SSAud®, and has been
auditing SMSFs since beginning her career in the super audit
division of Deloitte back in 1995 at the ripe old age of 17. Jo’s
passion for the SMSF audit industry saw her recently named
Telstra NSW Young Business Woman of the Year.

5. Interactive Poll #1
Interactive Poll #1
Question:
How many audits do you or your
business currently complete each
year?

6. The Spotlight on SMSF Auditors
“The work of approved auditors is fundamental to the
health of the SMSF market.
Approved auditors play an important role on behalf of
the community.
So naturally we're keen to support an increasingly
competent auditing profession”.
Stuart Forsyth, Assistant Commissioner Superannuation
There is a small window of opportunity
before auditor registration takes effect.
Now is the time to plan and take action.

7. The Current State of Play
The following professional requirements
apply NOW and will CONTINUE to apply:
• Approved Auditor
• Competency Requirements for Auditors of
SMSF’s
• Australian Auditing Standards
• APES110
• Revised GS009 is now available, guidance
statement issued by AuASB on Auditing
SMSFs
• ICAA Independence Guide for SMSF
Auditors (updated version expected)

8. The Current State of Play
The ATO’s 2011-12 compliance program for
approved auditors incorporates 3,900 planned
activities! Targets include:
• High-risk auditors (not identifying significant
contraventions)
• Serious breaches of independence requirements
• Limited or no evidence of an audit being maintained by
auditors (300 cases)
• Low-volume auditors
• Low cost auditors
• Auditors who fail to satisfy their personal tax obligations
• Field reviews of internal controls of practices that perform
over 300 SMSF audits annually
* Planning opportunity – in or out?

9. The Cooper Review’s
Housekeeping
Spotlight on Auditors
Cooper Review Statistics on SMSF Auditors
• 11,500 approved auditors undertaking SMSF audits
• Auditors on average completed 35 audits each
• 51% of auditors completed less than 5 audits (3% of
total funds)
• Only 2% of auditors conducted more than 250 audits
• 4.3% of audits done by auditors who weren’t
members of the 3 professional accounting bodies
• Audit fees decline based on scale (number of audits)
and specialisation
* planning opportunity

10. The Cooper Review’s
Spotlight on Auditors
“The SMSF regulatory framework is heavily reliant
on approved auditors, however the approved
auditor population has no minimum, consistently
policed, competency and independence standards”.
The proposed solution:
• Registration of approved auditors (with ASIC)
• ATO to police the approved auditor standards
• Linking registration requirements to ongoing
minimum competency and independence
standards .

11. Stronger Super – Industry Consultation
• Main points of contention:
- competency exams
- mandatory outsourcing
• Independence
Following industry consultation, there will be
no “mandatory outsourcing”. Instead APES
110 will be a legislative requirement for all
SMSF auditors as part of their ASIC
registration.
• Auditor Registration
Auditors WILL be registered with ASIC.
Announcement from Government expected
any day (?!) on this.

12. Auditors + Independence = APES 110
• APES 110 is the current standard for independence for SMSF
audit engagements
• Independence comprises of both independence of mind and
independence of appearance.
QUESTION: would your client consider your
current arrangement is “independent”?

13. Auditors + Independence = APES 110
EXAMPLES - When independence is or is likely to be impaired:
• Auditing your own fund
• Auditing the SMSF of a relative
• Auditing the SMSF of a partner within your own firm
• Auditing an SMSF where your firm provides financial planning
advice to the SMSF
• Auditing the SMSF where you have prepared the books
• Having at least 2 partners in a firm sign off each other’s work,
where there are not appropriate safeguards in place such as totally
separate accounting and audit reporting
lines and teams

14. Auditors + Independence = APES 110
When independence is or is likely to be impaired (cont’d):
• Two firms swapping clients to conduct audits – factors such as
relying on each other for revenue, a need to ensure an ongoing
relationship, pressure for unqualified audit opinions or other
factors may result in independence being impaired
• Outsourcing arrangements where a significant portion of the
auditor’s fees come from the one referral source
• Auditing the SMSF of a significant client of the firm
• Auditing an SMSF where the firm has invested the Trustee’s money
in entities related to the firm
* Planning Opportunity – proactive Rectification,
or Specialise to meet demand

15. Auditors + Independence = APES 110
If in doubt, outsource.
“Ultimately, if independence cannot be assured, then the audit
engagement must be declined. This principle applies regardless of the
cost to the firm, how simple the SMSF might be, how much your client
might object, or even when you know for a fact that the SMSF has
complied with all its obligations”.
Liz Westover, Head of Superannuation ICAA

16. Auditor Registration…are you ready?
There WILL be a competency exam as well as
experience requirements, police checks etc.
 New auditors (entering the profession after 1
July 2012) – experience component + competency
test
 Existing auditors – transitional arrangements
will apply (to qualify must have completed a
minimum number of audits within the 12mths
prior to 1 July 2012).
* Planning Opportunity!
Annual renewal will require ongoing experience
and confirmation of independence.

17. The Decision Process moving forward…..
What does it all mean for you?
It is projected that there will be a 50% reduction in SMSF auditors solely due to the
requirement to register with ASIC.
The Opportunities
• Are you In?
– Plan to qualify as an existing auditor
– Specialise to benefit from the demand for
outsourcing
• On the fence?
– Much clearer independence guidelines from the
professional bodies
• Are you Out?
– Pro-active rectification
– Act quick to secure an independent auditor before
demand spikes

18. The Decision Process moving forward…..
What does it all mean for you?
The Threats
• ASIC registration – meeting entry requirements
• Increased ATO policing activity
• ASIC powers (yet to be announced)
• Expect A LOT more scrutiny from the professional
bodies - CPD reviews, quality control reviews, and
targeted education
• Costs of registration – initial and ongoing
• High demand for outsourcing
• Small firms less likely to comply with APES110
• Succession Planning – are we heading for a repeat
of the registered company auditor crisis?

19. Interactive Poll #2
Interactive Poll #2
Question:
As a result of these Stronger Super
reforms, what is going to have the
greatest impact on your business?

20. The Decision Process moving forward…..
What does it all mean for you?
Let’s Talk about the “F” Word
……Fees!
The #1 concern for accountants considering
outsourcing is Loss of Gross Fee Revenue
So will audit fees rise or fall??

21. The Challenge is on!
“It is now up to the SMSF audit profession to ensure it
meets it’s obligations for independence with integrity
and professionalism.
The Government has supported the existing code of
ethics by determining that it should be adhered to by
all SMSF auditors. The profession must now prove
that this was the right decision”.
Liz Westover, head of superannuation ICAA

22. ENGAGE Super Audits
www.superfundauditors.com.au http://www.theauditorsblog.com.au/
• Online SMSF Audit Service available Australia-wide
• Audits performed by local, supervised, qualified audit specialists
• Well established company with a reputation for high quality,
reliability, superior turnaround and support
• The leaders in SMSF audit technology
Just call 1300 AUDITS, it’s that easy!

23. Next Webinar
• Members – Free*
• Non Members - $77 (inc. GST)
• SPAA & FPA points to be issued for
attendees (where requested)
* Refer to member resource library for further details
What we will be covering in the webinar:
• Important considerations when
structuring a pension
• Impact of TR 2011/D3 – when a pension
commences and ceases
• Segregation and Exempt Current
Pension Income (ECPI) issues
• Case studies to demonstrate strategies
and highlight issues
• Tips, and traps when establishing and
running pensions
Special Offer (Promo code – TSAAUDIT):
Non-Members - register for next webinar for just $55
(inc. GST), that’s a 29% saving on standard rate

24. Thank You
www.thesmsfacademy.com.au www.engagesuper.com.au
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short survey when E: info@engagesuper.com.au
exiting this session
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