Sent: 15-12-2009 13:57:02
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The Cooper Review & SMSFs
As you may have read elsewhere, the Cooper Review has released the issues paper for Phase III of its review into its review into the governance, efficiency, structure and operation of the super system.
The issues paper looks at structural issues for non-SMSFs and then a part specifically for SMSFs.
The review asks lots of questions about SMSFs which really should be asked. For example:
- Do the current compliance requirements for SMSFs impede an individual's choice to manage their superannuation given the perceived complexity in operating an SMSF? If so, how could this be improved?
- Should there be separate Acts for ATO-regulated funds and APRA-regulated funds?
- Is the ATO the appropriate regulator for SMSFs? And if so, does the ATO have any conflicts in fulfilling this role? If not, who would be the appropriate regulator?
And so on.
Responses to Phase III of the review must be made by mid-February next year. No doubt there will be lots of views. At least you all have the Christmas holidays to give this some thought and decide if you want to put in a submission and what it might say!
Last week the Cooper Review issued some statistics about SMSFs. As I've been quoted saying elsewhere the research shows a segment of the super industry in reasonable health.
But of course there is always room for improvement.
For example about 15,500 tax agents provide services to SMSFs. 3,100 tax agents only look after one SMSF. 620 tax agents look after more than 100 funds. Clearly the old Pareto principle runs true in this area (20% of auditors look after 80% of all funds).
Given the complexity of superannuation rules and SMSF issues it seems to me that it cannot be possible to audit these in sufficient depth. The issue is not the financial audit but the regulatory compliance audit.
This has led the Cooper Review the ask a range of questions about this issue including:
- Are current professional requirements and audit competency standards adequate?
- Should minimum standards be mandated or should the accounting bodies continue to develop them?
- Do approved auditors in general have the necessary level of skill and expertise to audit SMSFs?
- Should the category of membership [of professional accounting associations] be tightened to recognise the specialised competency required of SMSF auditors?
- Given the key role auditors play, how independent should auditors be from those who administer SMSFs, prepare their financial accounts or annual returns, or provide financial advice?
- Do the current independence standards provide sufficient guidance or protection for members and other stakeholders?
- Are the current penalties applicable to approved auditors who breach their obligations appropriate?
It will be interesting to see how the accounting associations react to this. Coming out all guns blazing and claiming that "our association is better than the rest" and we're all fine might not work I think.
One another note, last week the ATO issued its quarterly report showing the growth of SMSFs. There are about 417,000 super funds with about $370b in them.
It will sure be interesting to see if this growth continues in the years to come.
Finally please consider purchasing a copy of my book. You can look at the contents page at the following link: http://www.atcbiz.com.au/r.php?r=0mjd6ne
Two options are available - once only subscription - $55 inc GST - or an annual subscription will gives you access to all the updates made throughout the year ($120 inc GST).
The book can be purchased at the following link: http://www.atcbiz.com.au/r.php?r=5a4agqb
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