ART affirms ASIC decision to disqualify SMSF auditor
The Administrative Review Tribunal has upheld ASIC's decision to disqualify an SMSF auditor for failing to comply with auditing standards.
MD Nazrul Islam, of Clayton South, Victoria, was originally disqualified from being an approved SMSF auditor in February 2024 and appealed the decision to the Administrative Review Tribunal on 17 April 2024.
On 18 December 2024, the ART delivered its decision to affirm the disqualification, finding he failed to satisfy the relevant auditing standards on three audit files.
The ART’s reasons include that "the integrity of the SMSF system is important and the role of approved SMSF auditors is critical. Oversight of SMSFs and of approved SMSF auditors by ASIC and the ATO is also critical”.
General Member J Dunne said: “clear messages need to be given to approved SMSF auditors”.
Dunne continued that those messages include that it is not acceptable for approved SMSF auditors to:
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Withhold material from the regulators.
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Mislead the regulators with submissions you do not correct and later disavow.
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Rely on trustee representation letters as sole audit evidence without more – particularly when considering issues such as market value.
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Not have phone notes on the audit file of important discussions.
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Not document the SMSF auditor’s reasoning on the audit file.
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Ignore or not identify inconsistencies between documents.
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Maintain audit files that an experienced auditor could not pick up and follow.”
“The public needs to be aware that SMSF auditors do not always have a simple job where they simply rubber stamp financial statements,” the decision read.
“SMSF auditors provide a necessary check of matters in those financial statements and of the SMSF’s compliance with Australian law. If the impression is given by an approved SMSF auditor that they perform a simple task for a low fee, that auditor may not be completing the job adequately and properly giving rise to a risk of scrutiny of both the approved SMSF auditors and the SMSFs they audit by the regulators. Potential penalties can apply including to the SMSFs.”
SMSF trustees and members can check whether their auditor is registered, or whether a person has been disqualified, by searching ASIC's SMSF auditor register at connectonline.asic.gov.au.
