The AAT has affirmed a decision by ASIC to disqualify an approved SMSF auditor for failing to comply with the auditor independence requirements by auditing the SMSFs of close family members. The applicant, an accountant since 1975, had conducted numerous audits of SMSFs since 1999. Following an ATO compliance review, it was revealed that she had audited the single-member SMSFs of both her brother and her de facto partner for several years. The ATO referred her conduct to ASIC.

ASIC disqualified the applicant from being an approved SMSF auditor under s 130F(2)(a) of the SIS Act on the grounds that she had breached the auditor independence requirements in APES 110 (Code of Ethics for Professional Accountants) for each year she audited her partner’s fund and her brother’s fund. The applicant sought a review of ASIC’s decision and argued that it should have instead imposed conditions on her registration under s128D of the SIS Act.

In affirming ASIC’s decision to disqualify the applicant, the AAT ruled that the auditor independence breaches were a “very serious matter” that continued over 9 and 6 years for the respective funds. The AAT said that deterrence of other SMSF auditors requires that disqualification is appropriate as the independence rules are a fundamental component of the superannuation framework that cannot be disregarded.

(Whittle and ASIC [2018] AATA 1861, AAT, File No 2017/5737, Kelly SM, 18 June 2018.)

FJM 30.7.18

[LTN 135, 17/7/18; KPMG Daily Tax News, 18/7/18; Tax Month – July 2018]

Comprehension questions (answers available)

  1. Did the AAT uphold ASIC’s decision to disqualify the SMSF auditor for breaches of the independence standard?
  2. Was the auditor young?
  3. Was the lack of independence auditing her brothers and her defect’s funds (over 9 and 6 years, respectively)?
  4. Was auditor ‘independence’, a matter of sufficient importance, to the superannuation system, to require a ‘deterrent’ effect, which required disqualification?



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