Australia's three big accounting bodies want the Auditor-General to look hard at how the ATO reviews the auditors of self-managed super funds. In a joint submission on 2 November, CA ANZ, CPA Australia and the Institute of Public Accountants called for service-level commitments, published KPIs and reviewers with real audit experience. With SMSF auditors about to take on new Division 296 work, the timing matters for trustees as well as auditors.

What the submission asks for

The submission was made to the Australian National Audit Office's performance audit of the ATO's regulation of SMSFs.

The bodies want "clear service-level commitments for the key stages of an auditor review". They also want a defined scope for each review and a clear escalation path.

They are asking for key performance indicators, with regular public reporting against them, so the profession can see how long reviews take and how they are resolved.

And they want ATO reviewers to have practical audit experience.

These are proposals. The ANAO decides what it examines and recommends, and the ATO decides how it responds.

The complaints from auditors

The submission sets out what members told the bodies about their experience of ATO reviews.

  • Long timeframes for reviews.
  • Requests for information arriving "well after initial contact".
  • Delays when an auditor disputes a preliminary finding.
  • Inconsistent expertise and communication among ATO reviewers.

The bodies also object to what they describe as the ATO applying rigid interpretations of principles-based auditing standards, especially on independence, evidence and documentation. In their view, that amounts to the ATO setting standards rather than enforcing them.

That is a significant charge. Auditing standards are designed to be principles-based so that auditors apply professional judgement. If a regulator reads them as checklists, auditors argue, the result can be findings that turn on interpretation rather than on audit quality.

Why it matters now

This is the first ANAO audit of SMSF regulation since 2007, according to the SMSF Association's own submission, made on 26 October.

The SMSF Association called for a risk-based, proportionate approach to compliance and questioned the ATO's reliance on non-binding web content. Its chief executive, Peter Burgess, said: "Clear, timely guidance is a frontline compliance tool."

The pressure on auditors is also about to rise. From 2026–27, SMSFs must report each in-scope member's relevant super Earnings for Division 296 in the annual return, according to the ATO. If a fund misses this, the ATO will notify it and the fund must amend. The ATO says some funds may need an actuary.

Division 296 has applied from 1 July 2026, with a $3 million large balance threshold. The extra tax applies to earnings linked to balances above that level.

More reporting and more complex calculations mean more for the auditor to check. That raises the stakes if reviews of auditors' own work are slow or unpredictable.

What this means for trustees

An ATO review of an auditor is not the same as an audit of a fund. But trustees can feel the effects if their auditor is tied up or if the market for SMSF audit services tightens.

Every SMSF must be audited each year by an approved SMSF auditor before it lodges its annual return, and the timing rules are strict.

The ATO says the auditor must be appointed at least 45 days before the fund's return is due.

Hypothetical example: A new SMSF has been added to a tax agent's lodgment program, and its first annual return is due on 28 February 2027, a date the ATO says can apply in that situation. Counting back 45 days, the trustees would need to appoint their auditor by 14 January 2027. A fund that had to lodge by 31 October 2026 instead would have needed its auditor appointed by 16 September 2026.

Late lodgment has real consequences. The ATO says it can change a fund's super fund Lookup status to "regulation details removed", which can block rollovers and employer contributions.

For trustees, that makes a reliable auditor relationship more than an administrative detail. Delays anywhere in the chain, including in the auditor's own regulatory dealings, can flow through to the fund.

The wider debate about ATO compliance style

The accounting bodies' submission lands as the profession raises broader concerns about how the ATO is applying its powers and guidance.

A commercial survey published this week, covering July to September 2026, found 87 per cent of accountants believe the ATO has become noticeably tougher on enforcement and compliance. The survey is not an official measure, but it reflects the mood the ANAO is stepping into.

The SMSF Association's emphasis on non-binding web content goes to a long-running issue. ATO website material can be helpful, but it does not carry the protection of a public ruling. If reviewers lean on such content, auditors and trustees may find themselves measured against positions that have not been through formal consultation.

The joint submission's push for public KPIs is also about accountability. Published service standards would let auditors compare their own experience with the ATO's stated targets, and give the ANAO a baseline for future audits.

The ATO, for its part, has a statutory role in regulating SMSFs and approved auditors, and the ANAO's Job is to assess how effectively it carries that out. Nothing in the submissions changes the law; they are inputs to the audit.

What to watch

  • The ANAO's performance audit of the ATO's regulation of SMSFs, the first since 2007. Its findings and any recommendations will be published when the audit is complete.
  • The ATO's response, including whether it commits to service standards or KPIs for auditor reviews.
  • Division 296 reporting from 2026–27, which brings new earnings calculations into the SMSF annual return and audit cycle.
  • 28 February 2027: the possible due date for new SMSFs whose first return is covered by a tax agent's lodgment program, with auditors to be appointed at least 45 days earlier.