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I have an smsf audit for which we do not have full documentation , but I suspect a contravention , which the Trustees have realised . The Trustees now do not want me to finalise my Audit with a contravention and instead want to go shopping for a new auditor ( who will not contravene ) . Should I finalise my Audit with a contravention for incomplete source documents and a contravention for suspected in house asset breach ? Answer please . Laurie c
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Yes qualify the audit and put in management letter all your concerns.
Raise contravention report, notify trustees of your intention to send to ATO.
Forward contravention report to ATO, let them investigate, your role is only to bring to the ATO's attention concerns. It is the role of the ATO to determine if your concerns are valid and how they will proceed.
As you say, the trustees are auditor shopping, so means they suspect something is wrong, why should you be quiet in doing your job. Your silence could make you an accomplice. Sounds like they are trying to put pressure on you and influence your report. No respect for you in your role as the auditor.
many thanks for your guidance my friends . Laurie c
Hi Rex
Thanks for your comments and agree if no signed engagement letter in place it would put the auditor in a difficult position.
Thanks
SMSF AAA
I agree with the SMSF AAA approach, subject to you having been engaged to undertake that audit. Some auditors undertake audits before a signed engagement letter has been received, which is not recommended practice. Once you're appointed you have the above-stated obligations.
Hi Laurie
Thanks, this is an unusual situation. It would be great to get other member's views if they have experienced this situation.
You should consider lodging an audit contravention report in relation to section 35C(2) of SIS on the basis that:
"The trustees must provide the auditor with the necessary documents to complete the audit in a timely and professional manner; and within 14 days of a written request from the auditor".
In relation to the suspected in-house asset issue you could lodge an ACR using the professional judgement guidelines in the ACR instructions. That is you describe your concerns to the ATO in the ACR.
Section 129 of SIS is the section that requires auditors to report contraventions using the approved form to the regulator (being the ATO).
You are also required to tell the trustees in writing of any contraventions so I would suggest giving a draft of the ACR to the trustees for their response (prior to it being lodged).
Regards
SMSF AAA