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Data feeds a ‘double-edged sword’, warns auditor
While automated data feeds have led to some substantial efficiency improvements with the processing of SMSFs, they are also causing significant headaches for auditors and potentially compromising the accuracy of client data.
SuperAuditors director Shelley Banton says there is a misconception by some in the SMSF industry that just because there are automated data feeds tracking the movements of the fund that auditors don’t need to verify this information is correct.
“You’ve still got to look at the data feeds and make sure they’re aren’t any gaps where the data feed has dropped out. You also need to look at the date the data feed was started because if there are any time frames within that year where the data feed isn’t in there in the platform, you’ll need to get bank statements to cover off on those particular periods,” Ms Banton said.
SMSF practitioners and auditors, she said, also need to check that the assets and bank account are correctly recorded in the name of the super fund.
“When the assets are set up, the accountants are just typing in the trustee names and the super fund names so unless you’ve got the June 30 bank statement in front of you, how do you know?” she said.
“Some accountants are pushing back on providing that 30 June bank statement because they think that just because it’s a data feed it’s OK.”
Ms Banton said SMSF professionals should also be checking that the data feed at June 30 matches with the balance on the bank statement.
It’s important that auditors have independent evidence in their audit file to make sure the data feed coming in is correct.
“I think there’s a misconception out there that just because the data feed is out there that everything is hunky dory and that’s not necessarily the case,” she said.
Ms Banton said there are other things auditors need to look at from an audit perspective in relation to data feeds that they didn’t have to look at before.
“I think data feeds are a bit of a double-edged sword for auditors at least,” she said.
“There may be less information that has to be provided by the client, but this doesn’t mean your obligations as an auditor are mitigated just because the client has a data feed.”
“You still need to follow process and audit steps to make sure that you can confirm and verify that everything that’s gone through an account in that year is true and correct.”
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
Appeara to be a case of "Who moved my cheese" An Auditor like any professional must adapt to change. Paper statements are a bigger security risk than digital, just look at your bank website warning you about mail and identity fraud from paper statements. Quality Bank Feeds now show a daily digital untampered with balance direct from the bank. The new cloud based SMSF software can then provide new Bank Statements and Audit GL reports, that when understood actually make it easier to spot a missing or fraudulent transaction as the daily balance together with the source who last edited the transaction and the date and time it was edited.
0- MC you're missing the point. Data feeds drop out! Macquarie, one of the biggest CMA providers to SMSF has their data feeds drop out. Cloud based SMSF software is not 100% reliable.
0- But, as Ralph said below, the first step in preparing financials, is to reconcile the bank account. The accountant should be identifying missing transactions in the first place, instead of waiting for the auditor. Check the bank statement people!!0
- We administer nearly 3000 SMSFs. Data feed drop-outs are common and it would be poor form not to reconcile every transaction for this reason. Personally, I think the role of the Auditor is vital. Where there are humans involved there is error. An audit of a set of accounts provides an added level of comfort to me - both as a Director of the business and a SMSF trustee.0
- I doubt that accountants would not provide the 30 June bank statement if asked. Reconciling the bank account is the first step of preparing any set of accounts. Any accountant who doesn't check the data feed to ensure it reconciles isn't doing his job and getting a copy of the EOY statement is essential.0
- Forget financial audit, it should be a compliance certificate. Checking transactions & verifying balances is still inherent when looking for financial assistance to members, in-house assets or valuation & existence of non-listed investments0
- Some SMSF accountants just don't appreciate the Audit process and the value added. Preparation of the Statements and Returns seems to require the press of a button and the software does all the heavy lifting - the Audit process is a little more involved than that.0
- Sounds like auditors trying to justify their existence. How much longer you think we need to keep these guys employed before before AI can take over?0
- We deal with many data feed super funds as auditors and we do not sign off an audit without the 30th June bank statements. This has helped us to discover errors on several occasions where the data feed has dropped out and lost some of the transactions. Data feeds are definitely not 100% effective all the time so we need to be careful.0
- There are also issues over data manipulation. How would an auditor identify all transactions are captured, or transactions deleted?0
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