Accountants and financial advice: fitting round pegs into round holes

With the release by Minister Shorten this week of announcements dealing with the Future of Financial Advice (FoFA) reforms, it was encouraging to see that the federal government has acknowledged the important role that professional accountants play in the provision of financial advice to Australians.

In April 2010, the FoFA reforms discussed the removal of the “accountants’ exemption”, which had allowed accountants to advise on the opening and closing of self-managed super funds. There was concern that without an appropriate replacement, the role of accountants could be eroded, despite their status as trusted advisers.

Minister Shorten’s announcement, however, supports what we have always known – that it is in the best interest of our clients for accountants to be able to ‘consider a broader range of financial issues, particularly in relation to the establishment of self-managed superannuation funds’.

Consultation continues on exactly how professional accountants will fit into an overall regime that deals with the provision of all types of financial advisory services to Australians. As discussions continue, it will be important to ensure that square pegs are not shoved into round holes. We cannot simply try to fit accountants into a licensing regime in exactly the same way as financial planners – they offer different services, have different skill sets and different experience. Most accountants do not want to give financial product advice (and if they did, they would need to operate under a full Australian Financial Services License). They do, however, want to talk about a broader range of non-product issues. A new regulatory framework must be workable, sustainable and meet the needs of accountants and their clients.

As Minister Shorten recently said, ‘accountants are the trusted advisers of many Australian families’. In this capacity, clients ask their accountants questions on non-product issues that will not be asked elsewhere – the solution to the accessibility of financial advice for Australians must include an appropriate framework in which accountants can operate in order to answer those questions.

SMSF Auditors – striking the balance

The Commissioner of Taxation, Michael D’Ascenzo, recently described auditors as the ATO’s ‘eyes and ears’ for the self-managed super fund (SMSF) market, making an important contribution to the integrity of the system. I agree – SMSF auditors play a vital role in the success of this growing sector of the superannuation industry.

As the Stronger Super reforms are progressing, the measures for SMSF auditors around registration, competency and independence are being addressed. Because of their essential role, the government will want to maintain appropriate levels of competence for SMSF auditors.

The challenge for government and its advisers is to strike the right balance between determining the appropriate minimum requirements for auditors to operate, and ensuring that we still retain and attract adequate numbers of auditors to the industry.

The SMSF working group that is reporting to government on the Stronger Super reforms in the SMSF sector is currently discussing this very challenge, debating how much education and experience is necessary to qualify as an SMSF auditor.

While the bar cannot be set so low that underqualified and inexperienced auditors are able to operate in the industry, it is not in our best interests for the bar to be set so high that no one is willing to go through the qualification process. This could result in an insufficient number of auditors to audit the 440,000 SMSFs that now exist.

So what is the right balance? Consider these:

• What is the appropriate level of education; degree, diploma, specific SMSF audit course (or all of the above)?


• How many hours of SMSF audit experience should a person have before they can register as an SMSF auditor (suggestions have ranged from 100 hours to 1,000 hours)?


• How many audits should a person be undertaking per year for them to be considered ‘experienced’ enough to register as an SMSF auditor?

What do you think? How much education and experience do you think an SMSF auditor should have?