The Self-Managed Super Fund Professionals’ Association of Australia (SPAA) has welcomed the recommendations in Cooper’s phase three report on self-managed superannuation fund (SMSF) solutions announced yesterday, but has flagged concerns over some proposed measures.
“We’re very pleased that the review has made the comment that SMSFs are effective and are here to stay and they do have an important role to play in the industry,” SPAA chair Sharyn Long told InvestorDaily.
However, SPAA has raised concerns in regards to the proposed measures to strengthen the independence of auditors.
“We believe the panel’s recommendation to legislate full audit independence so that an individual or firms providing any services to SMSFs, the members or the trustees cannot also provide auditing services is unnecessarily heavy handed and would be more restrictive than current requirements for APRA (Australian Prudential Regulation Authority) regulated funds and indeed public companies,” Long said.
Many firms that provide a range of services to SMSFs currently have adequate controls that ensure full audit independence, Long said.
“I guess the devil will be in the detail in terms of knowing exactly how the recommendation will unfold,” she said.
“But I find that a very strong recommendation and one that could potentially lead to a need for accounting firms, or firms servicing SMSFs, to restructure.”
Meanwhile, SPAA welcomed enhanced controls and systems relating to SMSF rollovers to help prevent the incidence of illegal early release schemes and fraud.
“Evidence suggests bank accounts are the weak link in SMSF identity fraud and so the review’s recommendation to introduce member identity requirements is a positive step forward,” Long said.
SPAA also supported the measure to help would-be trustees evaluate the best superannuation option for their individual circumstances.
“However, we believe the most significant impact will come from raising professional and ethical standards of SMSF specialists and establishing a super licence for accountants,” Long said.
Other proposals in the Cooper review included a ban on artwork and collectibles in SMSFs and the removal of the 5 per cent house assets rule.
SPAA urged particular caution on these measures as they impose restrictions on how fund assets can be invested.
“The 10 guiding principles for SMSFs which have been developed by the panel recognise the importance of choice and freedom from intervention. The practical reality is that very few SMSFs hold these types of investments and those that do normally have some expertise in relation to that particular investment class,” Long said.
“The introduction of further transitional measures, and difficulties associated with what constitutes a collectible or exotic asset, will no doubt lead to further legislative complexities and we question the need for this given the modest extent of the issue.”
