ATO Leave SMSF Accountants hung out to dry
17 years.
That’s how long I’ve spent exclusively in Superannuation roles. Just long enough to see the changeover to Simpler Super and more than enough time to watch the train-wreck that is the Transfer Balance Cap.
Interestingly, I’ve spent about 50/50 of that time switching between SMSF Accounting and SMSF Auditing roles, until getting my own registration. Long enough to experience what it’s like for both roles.
Now, as an SMSF accountant, I tried it on with the auditor. Don’t we all? I never disrespected the audit role at the time, but knew this process was one of many before the firm I worked for was paid. We serve the clients, and happy clients pay their bills and all that.
Until one auditor clued on. See, she knew I was an auditor and her first reaction was “would you let this through?” or “would you risk your registration for this?”.
Check and mate, thank you. I respected her as one of the best I’ve ever worked with.
Which has me thinking, why do we (as SMSF Accountants) try it on? The only answer I could come up with is – happy clients pay bills. You see, no matter how much the trustees are at fault for breaches (or potential breaches), or how many rulings, practice statements, determinations, press releases and the like the ATO put out, the client doesn’t want to pay for that valuation on that property. They don’t see Reg 8.02B as important.
The ATO’s response is to put the pressure on the auditor. Which has seen many auditors leave or be forced from the industry. In some instances, this is a good thing, it removes bad actors from the scene.
However, it also removes the good auditors at times, including the one who asked me “would you let this through?” – she was too stressed about whether the ATO came knocking on her door to want to do it anymore.
Question is: why is all the education and compliance directed almost exclusively to auditors? After all, the accountant (or adviser or financial planner) are at the coal-face more than we are. They are the ones who are aware of what the client is done and earlier, rather than the last cog in the machine. Why aren’t they educating their clients? Why aren’t they helping the client comply better?
I have 2 simple answers:
- No money in it – there is no value-add in preventing the client from doing something they shouldn’t (hence why accountants lean on auditors to ‘be reasonable’)
- The ATO has produced nothing to help accountants help their clients either at the start, or an ongoing basis to educate them.
Sure, the ATO Trustee Declaration has a number of items pertaining to their obligations, but show me a client that has either read it, or understands it, and I’ll show you a unicorn. It’s purely there for the ATO to say “you signed this, we have a legal basis to take further action” – not to educate clients.
Why isn’t the ATO producing material for SMSF Accountants to share with their clients to help the client realise they have a compliance obligation? The ATO relish playing bad guy, so why don’t they educate first?
The same clients that know what Div 7A is (at least conceptually), know when their BAS is due (and when they get an extension – hello 28th February), will then know very little about why their auditor is asking for that valuation, GS007 report or why they have to breach for a non-arm’s length transaction. They make the auditor the bad guy, or ‘unreasonable’ for doing their job – all whilst getting paid the least of anyone in the SMSF ecosystem.
The ATO are the regulator, and part of that role isn’t just hitting the auditor (who gets paid the least for what they do) for making a judgement call or dealing with client pressure. It’s also making sure that everyone in the food-chain know their rights and their obligations, including trustees. And that information, given most trustees are not accountants, needs to be regular and bite-sized, easily understood and in-line with the ATO’s current requirements (including Reg 8.02B, including APES110).
To finish off, I’ll use the analogy of a bee. They may be a small creature, but they are necessary for the bigger animals to survive. Remove the bees, you remove the food. Remove the food, you remove the ability for animals to survive. The ATO must remember that we are all part of this ecosystem and interdependent. So making it easier for all to thrive benefits not only the auditor, but the accountant and the trustee and will contribute to a stronger, more sustainable superannuation system.
