Watertight quality control procedures are essential for SMSF practitioners given increasing instances of litigation, but auditors should be particularly pedantic about their risk management procedures, said CA and director of Veritas Corp, Sharlene Anderson.
Ms Anderson cited various cases which indicate that auditors in particular are often in the firing line for disgruntled clients, particularly those clients who have suffered losses, regardless of whether they have a strong case.
“You’ll notice that we’ve got accountants, we’ve got administrators, but [clients] always sue the auditor first,” Ms Anderson told delegates at a Chartered Accountants Australia and New Zealand conference in Sydney this week.
“The reality there is, in my experience, they don’t know the auditors, they don’t particularly like the auditor,” she said.
For example, Ms Anderson noted one case where an SMSF had invested a significant portion of its portfolio in a law mortgage scheme.
Several years later, it was discovered the investment was a Ponzi scheme, after the SMSF invested close to $800,000 over several years.
In this particular case, despite the client being advised at the time by an accountant and a financial planner, the client sued the auditor.
Auditors have also been in the firing line where death benefit recipients believe they have suffered losses, where the deceased did not have the appropriate documentation in place to support pensions. This includes in situations where it would have been the duty of another professional to have the appropriate documentation in place.
It’s not the job of the auditor to determine whether an investment is going to deliver a return or if it is a scam. It is there job to determine whether it is compliant. Hopefully any such claims were laughed out of court.
I am not sure what Trustees expect when they pay such a small audit fee.
You pay peanuts you get not much in return
My administrator uses Deloitte & the audit fee charged is $440. Thay won’t represent many charged hours at BIG4 charge rates