The term 'in-house audit' refers to an auditor who works for a firm, or network firm, that also provides services like accounting or administration to the same self-managed super fund (SMSF) clients.
Since 1 January 2020, auditors have not been allowed to perform in-house audits unless:
- they don’t assume a management responsibility for the audit client
- the other services provided are routine and mechanical
- the firm addresses any independence issues.
It is hard for firms to meet these rules, demonstrating the ‘routine or mechanical’ test is difficult due to the professional judgment involved. When we review auditors, we contact SMSF trustees to check their role in preparing the funds accounts and statements.
In a recent review using data matching we focused on auditors who still perform in-house audits. Our risk assessment shows around 800 auditors might still be doing in-house audits.
This financial year, we reviewed 30 auditors suspected of doing in-house audits. As a result of these reviews:
- 14 auditors were referred to ASIC
- 6 auditors were deregistered voluntarily
- 8 auditors received education
- 2 auditors were compliant.
Since 1 July 2021, we have referred 42 auditors to ASIC for various reasons including doing in-house audits, this was 32% of all referrals. In March 2024, ASIC released a statementExternal Link detailing the actions taken against 15 of the 42 auditors we referred.
Firms must follow independence requirements when planning their structure and their audit engagements. They should not rely on one referral source for their fees. ASIC suspended three high-volume SMSF auditorsExternal Link linked to an SMSF administration provider for not considering these factors.
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