ASIC has suspended the registration of three self-managed superannuation fund (SMSF) auditors for one year. ASIC determined auditors Wuzhao Fang, Huiting Li, and Xuan Wu breached independence requirements by auditing thousands of SMSF clients from a single referral source, who is a SMSF administration provider.
The SMSF administration provider offers online SMSF setup and administration, including assisting the SMSF trustee comply with their tax, accounting and audit obligations.
As a result of the SMSF administration provider engaging a limited number of SMSF auditors, these SMSF auditors received more than 99% of their overall audit fees from the online platform. ASIC found that this created self-interest and intimidation threats to the SMSF auditors’ independence that were not able to be safeguarded against. Auditors must carefully evaluate referral arrangements, particularly where it creates a fee dependence.
Ms Wu’s decision was reviewed at her request and an ASIC delegate confirmed the suspension decision. ASIC’s decisions may also be reviewed at the Administrative Review Tribunal upon application by the SMSF auditor.
The referrals were made by the Australian Taxation Office (ATO). The ATO will continue to scrutinise the source of SMSF audit referrals and ASIC will take action where SMSF auditors fail to evaluate and address threats to their independence.
