For a number of years, many in the SMSF sector have seen the annual audit requirement for SMSFs as an unnecessary regulatory burden, treating it as a “rubber stamp”. All too often funds were “audited” by an associate of the person or entity who prepared the fund accounts and tax return, or worse, by the same person. This cavalier attitude has led to some disastrous outcomes. Unsurprisingly, the ATO has responded to this industry practice by a renewed emphasis on SMSF auditor competence and independence. Like so much regulation in the financial services industry, it has been tightened up in response to an apparent unwillingness by the industry to comply with both the letter and the spirit of the rules.
From TSG’s perspective, we have always taken the view that, given the audit is a mandated regulatory requirement, we should strive to optimise its value for our clients. This means:
– Leveraging it to provide an additional level of peace of mind for fund trustees and members, and
– Driving technology and process automation to ensure that the audit is able to be provided as efficiently as possible.
We have been fortunate to work with our audit provider, Deloitte, to deliver against both of these objectives. Clients gain the comfort that a truly independent audit by a top tier firm provides, while benefitting from process and scale efficiencies to keep costs down.
We see increasing scope for the type of automation we are employing with Deloitte to drive efficiency and lower across the industry more generally. Technology and innovation has the potential to simultaneously increase protection for consumers, increase competition and drive down costs. Unfortunately opportunities are all too often dashed by the poisonous combination of industry culture and the reflexive self-interest of the major players and their lobbyists.
In this regard it is interesting that the recent report of the Murray inquiry emphasised the need for greater innovation in the industry. Technology and innovation have a tendency to lower barriers to entry and to unleash “disruptive forces” to attack industry incumbents. Incumbents in turn look for ways to slow down or control innovation. The more concentrated the market, the more incumbents are able to find ways to control the innovation process. It is therefore unsurprising that the Murray inquiry determined that the Australian superannuation was both relatively high cost industry in need of greater innovation.
Dec 12
