The move follows recent actions where three auditors, namely Wuzhao Fang, Huiting Li, and Xuan Wu, faced suspension due to independence breaches. The auditors became overly dependent on one SMSF administrator, creating a potential conflict of interest.
According to ASIC, the reliance on a single service provider, which also facilitated SMSF establishment and compliance assistance, raised concerns about the auditors' impartiality. This administrator had been responsible for over 99% of the auditors' income from audit fees, an arrangement deemed risky.
"This scenario presents self-interest and intimidation threats to auditors’ independence, with no viable safeguards," ASIC stated. The body stressed the importance of SMSF auditors conducting thorough evaluations of any referral arrangements, particularly those that lead to fee reliance.
In one instance, further appeal by Ms. Wu resulted in reaffirmation of her suspension upon review. Option remains for auditors to seek interventions from the Administrative Review Tribunal if they desire to contest these decisions.
This issue stems partially from referrals facilitated by the ATO. The ATO affirms its commitment to monitoring the origins of SMSF audit referrals continuously while ASIC stands ready to take enforcement action whenever necessary to protect auditor independence.
The original details regarding these enforcement actions were found in a preceding article by Mike Taylor dated 31 October 2024.
As this situation unfolds, it emphasizes the broader necessity for auditors to diversify their client base to preserve objectivity thereby securing a trustworthy financial oversight system for superannuations.
