SMSF Compliance Challenges and How accounting firms can address them

You might know SMSF compliance and its associated challenges if you are an Australia-based CPA or accounting firm. SMSF, or Self-managed super funds, must comply with the laws designed by Australian Tax Office (ATO) to qualify for tax leeway. SMSFs are established to provide tax concessions for retiring members. SMSF compliance has always been a matter of debate within the accounting domain, thanks to the challenges accounting firms face regularly. Due to the pandemic, SMSF compliance for accounting firms has undergone major changes in the past couple of years. However, post-pandemic, things are starting to look better. But still, small and mid-sized accounting firms often struggle with SMSF compliance operations.

This blog will address the common challenges accounting firms face in SMSF compliance, how to overcome them, and how outsourcing can be an absolute solution for SMSF compliance operations.

Common Challenges Accounting Firms Face in SMSF Compliance

A Self-Managed Superannuation Fund is a great option for investing retirement savings. However, for CPAs and accounting firms, SMSF compliance comes with various challenges. Some of these challenges include the following:

Constant Regulatory changes

One of the biggest challenges in SMSF compliance for accounting firms is the inability to follow the regulatory changes in SMSF compliance rules & regulations. SMSF compliance regulations constantly change. Therefore, accounting firms often struggle to keep up with the new rules & regulations for SMSF compliance. Due to this, accounting firms often end up paying penalties due to being unaware of the changes.

Investment Options

For CPAs and accounting firms, organizing clients’ investments is a primary criterion and also for the SMSF compliance process. To make effective investments, accounting firms must prepare and follow an investment strategy, organize record-keeping, and arrange an annual audit by a certified SMSF auditor. However, accounting firms spend eight hours a month managing clients’ SMSF, which is a lot of work compared to traditional accounting.

Record maintenance

For SMSF compliance, detailed records and documentation are needed as part of the process. However, CPAs and accounting firms that do not have the right set of technological tools in their business often face difficulties in SMSF compliance operations.

Data Breach

One of the biggest problems in SMSF compliance is data breaching. Compliance documents contain sensitive content and require ongoing vigilance. Therefore, CPAs and accounting firms must have a contingency plan and provide accurate data as part of the compliance rule.

Tips for Accounting Firms to Face SMSF Compliance Challenges

Accountants are at the forefront of providing regular updates to clients about SMSF compliance. However, this can become a challenge if accountants miss the new guidelines. Therefore, effective systems and strategies need to be placed that accountants can use to make the process simpler. Some of the most effective tips to face SMSF compliance challenges are:

Constant Upgradation about Regulatory changes

As mentioned, one of the biggest problems in SMSF compliance for accounting firms is the ever-changing rules & regulations about compliance. Accounting firms can only address compliance challenges by investing heavily in building an ecosystem that can provide regular updates on compliance rules and regulations. Proper training and education about the changing compliance laws can be beneficial.

Frequent SMSF Auditing

SMSF auditing is mandatory as part of SMSF compliance. However, this will improve if the accounting firms start frequent SMSF auditing. SMSF auditing ensures that the financial records are valid and accurate and that the fund complies with compliance rules. Through regular SMSF auditing, accounting can easily detect loopholes and address them.

Keep a watch on the Investments.

Ensuring the SMSF investments remain within the investment strategy is an excellent way in SMSF compliance. Accountants can assist clients with systems highlighting the investment strategy and asset allocations to monitor their investments. The process should allow clients to adjust their funds as per investment strategy.

Technological Benefits

Technology can play a major role in SMSF compliance. Technology can easily mitigate errors in compliance operations. Today, cutting-edge SMSF software is affordable, and investing in them can make the compliance process easy.

Prepare a contingency plan.

Data breaching is a major concern among CPAs and accounting firms. Therefore, to address a data breach, accounting firms must prepare a contingency plan to safely store important and sensitive data and be easy to access during SMSF compliance.

Accounting firms can benefit greatly by following these tips and will be able to prepare themselves to address the common challenges in SMSF compliance and assure clients that their SMSF is operating in compliance without any errors. Let us understand how outsourcing can benefit accounting firms in SMSF compliance.

How can Outsourcing be a Game Changer in SMSF Compliance?

The following points present how outsourcing can contribute immensely to SMSF compliance.

1. On-time services
SMSF compliance is a tedious and time-consuming process. Keeping up with new laws, maintaining records, and whatnot. Outsourcing gives the space to focus on the strategic operations that can grow and expand the business. Irrespective of workforce strength, outsourcing delivers projects and services on time.

2. Budget-friendly
The estimated value is enormous regarding the cost associated with the SMSF compliance tasks. Therefore, by outsourcing the SMSF compliance tasks, businesses can ensure that the outsourcing partner will manage compliance and other tasks efficiently at a reasonable budget.

3. Technological Benefits
Thanks to technological development, outsourcing partners use cloud systems and software for transparency in the SMSF compliance tasks. Leveraging technologies such as RPA (Robotic Process Automation) can enhance operations, leading to accuracy.

4. Complete Security
SMSF compliance is complex, involving inherent risks of the data breach. Easy access to sensitive data and information can be dangerous. Outsourcing partners are trustworthy and reliable in such matters. Advanced technologies raise alerts in case of fraud.

5. Professional Assistance
Clients do not have time to review the SMSF compliance laws and regulations. Outsourcing helps businesses by providing access to professional experts and their knowledge, regardless of size and nature.

Keeping the complexity of the task in mind, outsourcing SMSF compliance tasks is a brilliant step to reduce the challenges of compliance operations. Let us look at the things that need to be kept in mind at the time of outsourcing.

Things to Keep in Mind at the Time of Outsourcing

The following are things one should keep in mind at the time of outsourcing SMSF compliance operations.

Past Performance
Evaluating past performance in SMSF compliance operations is beneficial in the long term. Knowing the past track record of a potential SMSF outsourcing partner gives you insight into their management, success rate, and other key aspects.

Technological Availability
Clients’ data and information are highly sensitive. The potential SMSF outsourcing firms must have strong security parameters when dealing with sensitive financial data. Asking SMSF outsourcing partners about their cybersecurity policy and protocols against theft and breaches is critical.

Response Rate
The USP of outsourcing is that the firms are well-equipped to manage many requests simultaneously. Outsourcing firms should have an environment where the work is allocated sensibly, and the workforce can work toward managing clients’ queries.

Final Thought
SMSF compliance is an excruciating task requiring much time and energy. You need accounting aid to shoulder the burden and address its challenges. Outsourcing allows you to work alongside experienced professionals that can help you in compliance. But, the key is to find the right outsourcing partner. Fourfold Global is a recognized outsourcing partner with a proven record in managing accounting operations. The firm is trusted and known for providing its client’s advanced data maintenance and security features. Besides, we offer SMSF compliance services at negligible prices. Connect with Kate.