SMSF auditor independence: ATO guidance updated

The ATO has updated its Auditor Independence guidance for approved SMSF auditors. Specifically, the reciprocal auditing arrangements and referral source issues for firms when re-structuring.

The guidance clarifies that the ATO will not consider it an independence threat if the fees generated from one referral source is less than 20% of a firm’s total fees, where the firm is well established and mainly derives its income from providing auditing services.

If the fees generated from one referral source is greater than 20 per cent of the firm’s total fees, depending on the circumstances, the ATO considers that the independence threats may be significant enough to warrant the firm implementing appropriate safeguards to reduce those threats to an acceptable level.

The guidance also makes clear that despite the 20 per cent “threshold”, other factors may still be relevant in evaluating the level of any threats to independence. In some cases, the ATO says a lower or greater threshold may be appropriate.