Islam, of Clayton South, Victoria, was originally disqualified from being an approved SMSF auditor in February, and appealed the decision to the ART on 17 April 2024.

The facts of the case state that Islam was engaged by numerous SMSF clients as an approved SMSF auditor. ASIC records show that Islam completed 252 SMSF audits in the 2019 income year, 296 SMSF audits in the 2020 income year and 386 SMSF audits in the 2021 income year.

In his evidence before the tribunal, Islam accepted that the number of SMSF audits noted by ASIC in those years were “about right” and also advised the tribunal that he has two staff and does a mix of work, including some accounting work.

In late 2022, the ATO selected three of Islam’s audits for compliance review and consequently issued a Position Paper to Islam on 16 January 2023 expressing its concerns about those audit files.

Following a review, the ATO referred the matter to ASIC under section 128P of the SIS Act on 13 June 2023 on the basis that Islam failed to carry out or perform adequately and properly the duties and functions of an approved SMSF auditor at Australian law.

Figot said that one of the key takeouts from the case was that the ART considered the number of audits that could be completed to a satisfactory standard was around 250.

“We can see their reasoning - 250 and above, according to the ART, is probably too high,” Figot said.

“I think there'd be a lot of auditors doing 250 plus per annum who are doing a really good job and I might add that the ATO currently has a program of auditing auditors. Currently they say they're looking at volume audits, and they define volume as 1,000 or more per annum.”

Figot continued that the ART in this case acknowledged that Islam performed hundreds of SMSF audits per year.

The tribunal stated in its decision that “there are 104 weekend days per year After a further reduction for public holidays there were approximately 250 working days in 2020 and 249 in 2021, which means Islam must have completed or commenced more than one SMSF audit per working day.

“While I accept that many SMSF audits may be simple, I do not believe that the level of SMSF audit workload for one person is particularly prudent. It may cause corners to be cut.”

Figot said the figure suggested by the tribunal is probably the “maximum of prudence”.

“Sometimes you need a bit of a circuit breaker to think about how [the number of audits completed] will be considered if the ATO decides to scrutinise you,” he said.

“Even though it might be what you're used to doing, how will it look if it comes before the ART, for example. You never quite know how things are viewed.”