The sentiment coming out of the Cooper review around SMSF auditors is right – it is important to ensure that all professionals working in this sector are appropriately skilled and abide by independence principles. Can more be done to support this objective? Absolutely. Should ASIC be brought in as the regulator and standard-setter? No way.
There is a robust system in place already covering the quality of SMSF audit activity for the majority of these service providers. More than 95% of SMSF auditors, as members of the three professional accounting bodies, are obliged to adhere to competency requirements, auditing standards and professional and ethical standards.
Members are also subject to quality review and disciplinary action where appropriate. Recommendations for these measures to apply to 100% of SMSF auditors would negate the need for ASIC to issue a new set of standards.
The professional accounting bodies have always shown a willingness to constructively work with the government and regulators, including improving the integrity of the audit function for SMSFs. The introduction of mandatory auditor competency requirements in July 2008 was a significant step and we continue to see the positive impacts these are having on the industry.
There were many practical measures presented to the Cooper review panel for further improvements to the audit function; direct reporting by auditors to the ATO, enhancement of existing ATO online software and a register of auditors being provided by the ATO.
It is unfortunate that these were largely ignored in favour of recommendations for sweeping changes to be determined by another regulator to this sector. The result will be more complexity and greater costs, which goes against the very objectives Jeremy Cooper was trying to achieve.
Friday, July 23, 2010
Wednesday, July 14, 2010
Cooper: a super review?
The timing of my first blog couldn’t have been better. With the release of the Cooper report on Australia’s superannuation system last week, I have been canvassing members’ opinions on the recommendations. What did you think of the Cooper report?
Overall, I think there are some great ideas in there. MySuper and Superstream offer up some fantastic ideas for improving the super system for all Australians. The use of tax file numbers as an identifier to ensure people are correctly matched with their super savings – and stay that way – is a ‘no brainer’. Making super funds more comparable and transparent, and trustees more accountable, will go a long way to restoring confidence in our super system.
It’s a sad reality that MySuper was conceived because the majority of people – 80% – are disengaged with their super. But, in order to foster re-engagement, MySuper will need to be supported by other measures designed to educate Australians and grow their confidence in their retirement savings. Engagement should be a top priority for the government and hopefully that will be addressed in their response to the report.
My biggest concern with the Cooper report is that some of the recommendations – for example to increase regulation of SMSF auditors – reflect a misunderstanding of current systems and a failure to consider more practical measures that would achieve desired outcomes.
Other recommendations appear to have been made on assertions without supporting analysis, such as the proposal for ASIC to regulate auditor competency requirements.
The challenge for the government as it pursues a simpler, more efficient super system will be to weigh the benefits of increased regulation against the risk of strangling certain sectors of the industry.
I’m interested in your views. There will no doubt be much more discussion on these and other super issues as the government prepares its response to the Cooper review in this, an election year.
Overall, I think there are some great ideas in there. MySuper and Superstream offer up some fantastic ideas for improving the super system for all Australians. The use of tax file numbers as an identifier to ensure people are correctly matched with their super savings – and stay that way – is a ‘no brainer’. Making super funds more comparable and transparent, and trustees more accountable, will go a long way to restoring confidence in our super system.
It’s a sad reality that MySuper was conceived because the majority of people – 80% – are disengaged with their super. But, in order to foster re-engagement, MySuper will need to be supported by other measures designed to educate Australians and grow their confidence in their retirement savings. Engagement should be a top priority for the government and hopefully that will be addressed in their response to the report.
My biggest concern with the Cooper report is that some of the recommendations – for example to increase regulation of SMSF auditors – reflect a misunderstanding of current systems and a failure to consider more practical measures that would achieve desired outcomes.
Other recommendations appear to have been made on assertions without supporting analysis, such as the proposal for ASIC to regulate auditor competency requirements.
The challenge for the government as it pursues a simpler, more efficient super system will be to weigh the benefits of increased regulation against the risk of strangling certain sectors of the industry.
I’m interested in your views. There will no doubt be much more discussion on these and other super issues as the government prepares its response to the Cooper review in this, an election year.
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