SMSF auditors have until 1 July 2021 to ensure their firms comply with the requirements of restructured APES 110 Code of Ethics for Professional Accountants (including Independence Standards).
The Code and the updated Independence Guide indicate that for in-house audits of SMSFs, the practice of having “Chinese Walls” between the audit team and accounting teams will no longer meet independence requirements, except in limited circumstances. The specific requirements in the Code to maintain independence in such cases include that a firm does not firstly, assume management responsibility for an audit client, eg prepare financial statements, or make other decisions in respect to the fund’s compliance with superannuation law. If this is met, the auditor must have evidence that accounting or bookkeeping services provided are routine or mechanical, and even then they must address any independence threats resulting from such services.
The ATO says it will provide support and guidance to assist auditors during the 2020-21 year as firms looks to consider restructuring their audit engagements if necessary. Audits completed after 1 July 2021 will need to comply with the independence standard, regardless of what financial year the audit relates to. The ATO may refer firms in breach to ASIC for further action.