Auditors of SMSFs must take care with third party reports or risk exposing themselves and their clients to fraud, Sharyn Long Chartered Accountants principal Sharyn Long told Self-Managed Superannuation Fund Professionals' Association of Australia (SPAA) delegates yesterday.
The main problem with reports from service organisations, mainly wrap accounts, centres on the internal controls associated with the information provided.
As part of the SPAA group that helped formulate the new Auditing and Assurance Standards Board guidance statement GS009, Long contacted several service providers to determine the audit procedures incorporated in their reports.
"Generally what we found was that there was no actual work done and no audit opinions issued in relation to the wrap account itself," Long said.
"If we take one of those reputable organisations there were audit procedures around that organisation in order to comply with their FSR (Financial Services Reform) license, but there were no audit opinions specifically being issued with regard to the wrap account."
The controls reports are typical of what auditors ask for from external service organisations to help them ascertain the internal controls that organisation applies.
"What we found in most cases was if you rang up and asked for a controls opinion they would send you out something that generally applies to that organisation and not the wrap itself," Long said.
"In most cases all they were doing was just issuing some sort of touch report with a sign-off from one of the big four firms."
Long said auditors needed to scrutinise the external reports they receive and could not automatically assume they are reliable because the source organisation is a reputable name.
"You've got to be very careful about that because you've got greater risk when there is a third party involved," she said.
