SMSF Auditor Registration Fees

ASIC have lost the plot.

SMSF auditor registration fees are presently $107. This is planned to increase. To $3,429 from 1st July 2018. No typo in my post. No extra digit - A 3100% increase

Any auditor who wants to cease being a registered SMSF better act fast because they also propose a new fee to cancel auditor registration. That will be $899, rather than the $0 fee now.

SMSFs can expect their audit fees to be impacted in many cases as it seems unlikely that even a large auditor would need to pass on this (more than ) massive cost increase as well as escalating PI insurance costs.

 

Some vested interest has been systematically targeting SMSF in the last couple years with their lobby to make it a lot less attractive with the high fee structure because this is a massive threat to their gravy train super fees.

I just have to cop it and still outperform the lot of them

 

The end SMSF customers will continue to have to pick up the tab on these rising, unpredictable and uncontrollable fees.
Its called the hidden and actual SMSF taxes, which many don't really learn about into after several years of running one of these.

Your returns under these structures need to be well and truly outstanding for the whole exercise to be worthwhile. Otherwise you are just funding this industry.

 

True, but its also worthwhile understanding the unique issue with SMSF "fees" which are unique to all other forms of super.

All super entities charge fees and these are generally are based on balance. However, SMSF fees are not fees but operating costs which are largely fixed in nature . eg Auditor fee, accounting and tax, ASIC, SMSF levy etc.

SMSF costs tend not to rise with the number of members or their balance. We can usually complete SMSF work for a similar cost whether it has four members or one and if it has assets of $300K or $2m. Each fund is different and its records and investment types will dictate the cost. Those who use old fashioned accountants who use accounting software rather than specialised SMSF software often contribute to excessive costs as modern SMSF software can automate many tasks that were one done manually.

Two members funds with $400K and above are often comparable to costs for industry funds. For higher balances cost efficiency can occur. Personal financial advice to compare this is needed I will say.

Cost is just one factor in super. Most SMSF members choose a SMSF for control issues rather than cost issues

 

Yeah cost is not really a factor for me though I think it unfair they jacked up these fees for SMSF
and the cynical in me thinking that it all got to do with making it as hard as possible for would-be SMSF to think about taking their money out of big super fund.

This is the industry that takes easy 35bn in fees from less knowledgeable people each year and it doesn't stop there it keeps going up so they have vested interest to lobby and protect this river of gold

I took control of my super when it was 130K balance in my 30s having it in the Superfund for 13 years and going nowhere since I took control of it less than 7 years ago my SMSF balloon to over 1/2 Million and continue to do so, I hope to rack up easy a few million in the next 15-20 years.

it could have been a lot better if Comsec let my SMSF super take on more exotics products in the market but they won't

 

The fee is for the auditor...It has to flow through to SMSFs however. The low prices many charge for audit cant be eroded further I would think. Cost increases are inevitable. Changes proposed for industry funds could make their fees rise too....Forcing them to have boards independent of unions.

ASIC have jacked up loads of fees. Their penalties and compliance penalties are also going sky high (except if you are a bank it seems). A small payday lender in Vic just copped a $7.7m penalty plus banned from operating for 18 years. (I question if that will ever be paid)

Exotics ?? Whats that ? What sort of risk management strategies can be implemented to managed leverage, currency or other risks ? Having a punt on a win /lose and investing are not the same thing. Many products lack a real return for the true risk and are peddled by product makers dangerously to unqualified buyers. Just being listed doesnt mean its secure either. Loads of products have no two way market and a market maker dictates the buy price. In a crash who knows what that could be ?? And unlisted can be highly illiquid. Pre-GFC mortgage funds are still trying to pay members. Perhaps someone like Lottoland could create some "foreign managed investments" for SMSFs....Based on gambling ? Some products arent that different.

Authorised product lists are often there for protection from people who dont know better. Some are highly leveraged ETFs and other hybrids out there that are dangerous and misunderstood. Like selling prescription medicine over the counter. While SMSF laws dont really restrict what you can invest in sometimes people with years and years of skills and qualifications make a better choice of what they shouldnt invest in.

I have seen some trustees well outperform markets year after year but its a minority. My guess based on 25+ years is most SMSFs perform fairly well except if they are low balance but nowhere near at level of some funds. If I had to guess I would say 10% outperform and 40% do "OK" but undermanage their investments (often too much cash and no diversification) and 50% take on risk and take losses that could have been avoided. Losses are hard since each loss requires a higher over-market performance to recover the loss.

Broader diversification in large funds helps to shield some of that BUT the problem with public and industry funds is they have a limited range of investment strategies and ALL of them mandate a minimum % of certain classes. So they are forced to hold and arent allowed to dump everything into cash. Few SMSFs however avoid market corrections and hold rather than sell just like larger funds. I have seen so many hold a gain fearing tax of 10% rather than take the profit and cash in. Only to lose 20%+ in a crash like the GFC.

 

What an obscene increase.

Buying scratchies in my SMSF sounds interesting

 

Who does the 'SMSF auditor registration'?
If it is Gov only, then what do they do for the 3K?
If not, how can anyone force the pricing?

 

ASIC does the registrations which is a Government organisation.

 

So, that is a one off fee?

 

its a yearly registration fee

 

Aus Govt again mercilessly screws small business taxpayers, self-funded retirees and industry participants.
Aus Media response…….yawn.

Meanwhile Dean from Married at First Sight passes wind.
Aus Media response……..type type type.

Welcome to Australia, have a nice day.

 

The amount of costs that have increased for SMSF professionals and firms like mine is ridiculous, if we did not have a steady income from our fantastic client base all over australia then I would feel these costs are not sustainable. Audit is naturally one stream of my business - if audit is the sole stream of income - i'd say firms may struggle. You will see the number of SMSF auditors will continue to diminish.

You cannot just pass these costs onto a client when people can quickly google and offshore to Indian audit firms or 'low cost providers'. For that reason I only audit small accounting firms - it is just now cost efficient, given the risk to expand this area of the business and ASIC is doing their best to screw us - in all respects. The amount of risk in audit cannot be justified by a $200 flat audit fee, and with that fee, you cannot do a substantive audit in accordance with our standards, as a result you need to charge more to reflect the risk and procedures of an audit.

Cheers Ivan

 

Can I ask how much is your typical auditing fee? I think I paid around 800-1000 for my SMSF
but my is very easy and straightforward all in the stock market and I have all the paper trails to go with it to a cent it all mostly income and capital gain each year

Money usually move from between 2 account my SMSF bank account and Share settlement account

 

Just to clear something up. The $3,429 is not for the annual fee us SMSF auditors pay.

It is for new auditors to be registered. It is a once off fee.

It will not affect current auditors.

The current annual fee is $54

The cancelling of registration fee is interesting though. I wonder what would happen if you just did not lodge your annual statement and pay the $54.

 

But is that just for audit or is that the total the accounting fee.

 

I refuse to even discuss "cheap audit fees" with the numerous calls we get each year. We have a CA firm do ours. Its a fixed fee and typically $484. I suspect they would love to raise fee but cant as they must compete with several tiers of providers. As a past auditor I decided that had to be either an adviser or a auditor. I choose adviser and respect the time , risk and work required to audit a fund diligently. For $200 you really cant be doing much.

When I have a client with a issue I can call speak to the auditor and get clarity immediately. So I can handover the final job in a manner they can sign off. If clients wish to use an alternate provider they can but we dont assist without charging for the time (no charge for our preferred auditor). In one case I recall two hours dealing with pedantic small issues I disputed.

I believe in our industry we must have self respect and chasing a cheapie fee when you suspect it likely to be done offshore (privacy and data security ?), in a low cost place by staff who may not even be qualified or even for a fee that you wouldnt charge yourself then what sort of recommendation can you give a client ?

Its like $600 smsf administration etc. You will get exactly what you pay for. It is impossible to deliver quality.

I'm surprised that ASIC have raised the fee and imposed a further cost. PI for audit is already a staggering cost

 

I will have my return soon and see the cost but roughly cost me all up $1200-$1500 to lodge my SMSF with my accountant and audit fee is around 800-1000

I pay a bit more close attention this year to the fee

I am not after the cheapest rate, I am after quality work for a fair price so I don't mind paying industry standard