I agree, I see no problem with the accountant paying the audit fee and claiming it back from the client as a disbursement. I would ensure that the audit invoice is addressed to the Trustee. Adding a mark up for whatever reason and covering it in the description "audit fee" seems to me a misrepresentation of the audit fee and a deception by the accountant. When the Fund pays the accountant's invoice the audit fee needs to be properly dissected in the Fund's financials less the "mark up".

Hi Mandy

Your question is can the accountant include the audit fee in his / her invoice & have a mark up on that amount

It is common practice in the industry for accountants to pay the auditor and include the amount in their accounting invoice issued to the Trustees. My understanding is that there is nothing in the independence standards / guidelines that would prohibit this. However, preferably, from an independence perspective the audit invoice should be sent direct to the trustee that then pays the fee directly from the Fund. The auditor is appointed by the Trustee and not by the accountant. There is also the argument that the audit engagement letter and representation letter should be sent direct by the auditor to the Trustee of the Fund.

If the audit fee is part of the accountant's fee this should be detailed in the audit engagement letter as to exactly how the invoicing of the audit will work.

My view is that if the accountant wants to mark up the audit fee if it is part of their invoice then this should be detailed in the invoice where as the actual audit fee is disclosed and perhaps a separate line item re time involved in assisting the audit process.

It would be great to get other members views re this issue.

Thanks

SMSF AAA