The results of the Institute of Chartered Accountants of Australia's quality assurance program have shown the audits of self-managed superannuation funds (SMSF) need improvement.
The results showed only 5 per cent of SMSF audits did not depart from the professional standards needing to be adhered to.
On a slightly more positive note, 73 per cent of the departures were not classified as serious, while the program assessed 22 per cent of audits that departed from the standards required a follow-up review.
However, Veritas Corporation director Sharlene Anderson warned the fact some departures were not considered serious did not mean those elements had no serious implications for practitioners.
"Personally, I don't like the departures that are not serious. If you're not complying with the audit standards I'm not sure the PI (professional indemnity) insurer will differentiate between serious and not serious," Anderson said.
"You want to be confident what you're doing meets the requirements, but this is a process of just how serious it is in so far as what you've got to do to rectify the departure."
She highlighted one of the more concerning departures from the professional standards was not satisfying ASA 230, which covers audit documentation.
In regard to this standard, some SMSF auditors were found to have no working papers at all.
"It's scary, scary stuff. What did they have? An audit report and that's it and it's on the tax file," Anderson said.
Others did not have any documented evidence to give an experienced auditor, having no previous connections with the audit, the ability to understand the logic and conclusions made.
"Insufficient documentation is one of the really key themes and that's a judgment call as to what is acceptable. You need to ask yourself: 'Could I justify this to a PI insurer or could I justify this in court?', and that's your good litmus test," Anderson said.
The quality assurance program was performed for 2011 over a 12-month period with around 450 practitioners examined.
