The ATO said there are changes to the guide that SMSF auditors must familiarise themselves with in chapter 8.

“In particular, as a result of the restructured code, the guide now makes it clear that an SMSF auditor cannot audit an SMSF where the auditor, their staff or their firm has prepared the financial statements for the SMSF unless it is a routine or mechanical service,” it stated.

“The firm must also address any threats created by providing such services that are not at an acceptable level.”

Services that are “routine or mechanical in nature” require little or no professional judgement and examples are listed in para 601.4 A1 of the restructured code, the Tax Office said.

“When monitoring whether the preparation of accounts by the auditor’s firm is routine or mechanical under the new standard, the commissioner will expect to see appropriate evidence on the auditor’s file that the SMSF trustees took responsibility for the financial statements and had sufficient knowledge, skills and experience to do so,” it said.

“For example, this evidence could consist of trustee-coded transactions and approved trustee entries in the trial balance that the auditor’s firm then use to prepare pro-forma financial statements. Auditors shouldn’t assume that copies of signed financial statements and trustee representation letters amount to audit evidence that meet this requirement.”

Even where the preparation of the financial statements is routine or mechanical, both the commissioner and ASIC as reasonably informed third parties require the auditor to use safeguards to reduce the self-review threat to an acceptable level.

“These safeguards could consist of using professionals who are not audit team members to prepare the financial statements or having someone review the audit work who was not involved in preparing the financial statements,” it explained.

The ATO noted that the guide also explores other scenarios that auditors should look at to ensure they are not breaching the independence standards in the restructured code.

Some of these include the books prepared by the auditor, the accounting firm acting as a registered tax agent or auditor, and auditors who audit an SMSF where the auditor was previously a consultant, partner or employee of the firm.

Auditors should also consider the relationships they have between auditors and referral sources including auditing multiple SMSF clients of an administration firm, an auditor doing SMSF audits for an accounting firm where the principal is related to the auditor, reciprocal auditing arrangements, concentration or referral sources in regional areas and auditors contracting out accounting work for an SMSF client.

“During the 2020–21 financial year, the commissioner will write to auditing firms where our data indicates that the auditor could also be auditing financial statements prepared by the same firm to assist auditors [in complying] with the requirements under the restructured code,” the ATO stated.