Evidence problems the ATO sees in auditor referrals
The common issues the ATO lists in its referrals of auditors to ASIC include failing to obtain sufficient appropriate audit evidence, inadequate evaluation of that evidence, and inappropriate documentation to support the conclusions reached.
A fabricated bank statement is, in effect, a way of getting you to fail on the first of those. If you accept a document without testing where it came from, you may have no real evidence at all.
Remember
- Evidence has to be sufficient, appropriate and evaluated.
- Documents must support the conclusion on the file.
- Accepting a document without testing its source is the gap criminals use.
Facts and sources for this part
- Common issues in the ATO’s referrals of auditors to ASIC are failing to obtain sufficient appropriate audit evidence, inadequate evaluation of that evidence, and inappropriate documentation to support the conclusions reached. [S14]
Documents that look perfect
Our advice: a clean statement or letter is not proof. Documents made with AI tools can have the right fonts, a tidy layout and sums that add up, so appearance alone proves very little.
Our advice: check where the document came from and whether it agrees with other evidence. Is the balance the same as the bank’s own data feed or a confirmation you requested yourself? Do the dates and running balances flow correctly? Does the account name and number match the fund’s registered details?
Remember
- A tidy document proves little.
- Test the source and compare with independent evidence.
- Check names, numbers and flows, not just the look.
False audit work in another auditor’s name
ASIC alleges that a banned SMSF auditor created a series of false documents, a letter and 47 SMSF audit reports, and continued to act as an SMSF auditor while knowing he was disqualified. These are allegations in a matter still before the courts.
The ATO describes SAN misuse as an approved SMSF auditor’s details being entered incorrectly, or an audit not having been undertaken, and says the TPB has terminated tax agents who deliberately misused an auditor number. If your auditor number turns up on a return for a fund you never audited, that matters.
Remember
- Audit reports can be forged.
- SAN misuse means an auditor number on a return without a real audit.
- Check which funds quote your number, and tell the ATO if one is wrong.
Facts and sources for this part
- ASIC alleges that a banned SMSF auditor created a series of false documents, a letter and 47 SMSF audit reports, and continued to act as an SMSF auditor while knowing he was disqualified. [S10]
- The ATO describes SAN misuse as an approved SMSF auditor’s details being entered incorrectly, or an audit not having been undertaken, and says the TPB has terminated tax agents who deliberately misused an auditor number. [S14]
Checking who is registered
ASIC says the specific conditions on an SMSF auditor’s registration can be seen by searching the auditor’s name in ASIC’s Professional Registers Search. A trustee can use the same register to check an auditor.
Our advice: when you take over a fund from another auditor, check that the previous auditor was registered and not disqualified at the time of their reports. Keep a screenshot or printout of the register entry with your file.
Remember
- The register shows auditors and their conditions.
- Check the previous auditor’s status when you take over a fund.
- File a copy of the register entry.
Facts and sources for this part
- ASIC says the specific conditions on an SMSF auditor’s registration can be seen by searching the auditor’s name in ASIC’s Professional Registers Search. [S12]
The insider risk
ASIC permanently banned a South Australian SMSF accountant after a conviction for stealing funds from a client’s SMSFs. Not every theft comes from a stranger.
Our advice: separate duties where you can. The person who prepares payments should not be the only person who approves them, and trustees should see their own bank statements directly, not only copies passed through a third party.
Remember
- Fraud can come from inside a professional’s circle.
- Separate preparing from approving where possible.
- Trustees should see statements themselves.
Facts and sources for this part
- ASIC permanently banned a South Australian SMSF accountant after a conviction for stealing funds from a client’s SMSFs. [S15]
Check what you have learned
Three questions from the test, each explained. Tap an answer.
Question 1 of 3
A trustee’s PDF bank statement conflicts with the bank feed. Which response fits?
Show the answer
Right answer: B, Get confirmation at source before relying on either. Evidence must be sufficient and appropriate, and a conflict between two sources has to be resolved at source. [S14]
Question 2 of 3
A tax agent says a return quotes your auditor number for a fund you never audited. What is the best response?
Show the answer
Right answer: B, Check your records, tell the ATO and keep every email. SAN misuse matters, and the ATO relies on auditors telling it which audits they have actually completed. [S14]
Question 3 of 3
A bank statement has perfect fonts and correct sums. What does that prove?
Show the answer
Right answer: D, Very little: check its source and compare it with independent evidence. Evidence has to be sufficient and appropriate; how a document looks does not show where it came from. [S14]