CA ANZ welcomes ASIC crackdown on super system audits
As ASIC ups its “proactive surveillance” of auditor reporting, the regulator has said this will also apply to the financial reporting and audit of registrable superannuation entities.
ASIC has revealed its surveillance report into the financial reporting and audit of registrable superannuation entities, a move welcomed by Chartered Accountants Australia and New Zealand (CA ANZ).
On the surveillance, the accounting body said it looked forward to continuing a constructive dialogue with the regulator to achieve a balanced approach to valuing complex assets.
As there has been increased auditor action from ASIC as of late, as previously reported by Accountants Daily and Accounting Times, CA ANZ voiced its support for continuous improvement in audit quality and transparency.
In its report published 30 September, ASIC divulged a pattern of inconsistent approaches to disclosing investments, limited disclosure of sponsorship and advertising expenses, as well as insufficient audit evidence obtained in the valuation of some investments.
Kate O’Rourke, ASIC commissioner, said it was a crucial area the regulator needed to increase its surveillance based on high quality audited financial reports underpinning members’ confidence in the accuracy of information.
“When trustees and auditors do not adequately perform their roles as gatekeepers, there is a potential risk of misstatement of asset values,” she said.
“Super trustees must have appropriate governance arrangements to assist with the preparation of high-quality financial reports, while auditors must perform independent audits in accordance with the relevant auditing and assurance standards.”
Amir Ghandar, CA ANZ reporting and assurance leader, said the report was likely to be of particular interest to SMSF auditors based on unlisted assets being common in SMSF portfolios.
“ASIC’s report rightly acknowledges the importance of high-quality auditing and financial reporting to the integrity of Australia’s superannuation system. Robust reporting is essential and, when it comes to valuing complex assets, results matter – not just the effort – which is why finding the right balance is crucial,” he said.
“Doing more audit work can help, but it’s important to keep things balanced, audits should be efficient and make smart use of members’ money.”
Despite the regulator’s helpful guidance, Ghandar warned that trustees and auditors still needed to use their judgement to focus on what mattered most.
“The report is a must-read for superannuation fund trustees and their auditors, who should act on ASIC’s recommendations by ensuring that fair value disclosures and expense information are clear and meaningful for fund members and that robust audit evidence is provided for investment valuations,” he said.
As valuing SMSF assets frequently involved complex judgement calls that could have significant implications for member outcomes, CA ANZ noted it would support improvement in audit quality and transparency through reform.
Ghandar said the accounting body was calling for reforms to give ASIC firm-wide jurisdiction and adequate resourcing to fulfil its role as Australia’s chief audit regulator.
“We remain focused on earning and maintaining public confidence in the audit profession. Surveillance findings are being taken seriously and acted upon, and we welcome constructive dialogue about how the profession can evolve to meet emerging expectations.”
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