Why accountants need insurance
As data-matching grows more powerful every year, the right insurance can safeguard professionals against the increased risk of audits and stronger government scrutiny of clients.
- Government data matching across Australia and New Zealand has become very sophisticated
- There is now an increase in employer obligation audits and broader audit scopes in Australia. In New Zealand, Inland Revenue is initiating more specific audits
- Accounting firms need to insure themselves against the risk of fallout with clients due to greater unpredictability
By Tarini Puri
Government data matching across Australia and New Zealand has become very sophisticated. The amount of data readily accessible to the government is not only greater than ever before, it is also more current.
With the introduction of One Touch Payroll and Super Stream in Australia, it would be fair to predict an explosion in the number of government reviews likely of the Superannuation Guarantee Charge and compliance required with other accounting obligations for companies in the future.
The Australian Tax Office is focusing more than ever on employer obligation audits, payroll tax activity, work-related expenses, the sharing economy (e.g. Airbnb) and tax agent profiling. A wider outlook reveals that governments around the world are looking to transfer pricing or intercompany transactions with a push for taxpayers to “pay their dues” in countries where they earn income. This doesn’t only affect larger companies like Google or Apple, but will have implications for multinational SMEs in both Australia and New Zealand.
In both these countries, there is a heightened focus also on crypto currencies (e.g. Bitcoin) and the cash economy.
To safeguard against the risk of fallout with their clients as a result of the unpredictability of audits and government scrutiny and how much they will cost, it is increasingly prudent for accounting firms to insure themselves.
What the recent claims trends reveal
Accountancy Insurance, with its wide policy coverage across both Australia and New Zealand, has seen a high number of claims, including more than 20,000 Audit Shield claims over the past 14 years. According to the company’s estimates, on average, the company pays in excess of one million dollars per month in claims across Australia, New Zealand and Canada.
Analysis of recent claims trends reveals a drop in Business Activity Statement/Goods and Services Tax verifications, but an increase in employer obligation audits and broader audit scopes in Australia. In New Zealand, Inland Revenue has previously launched audits via Client Risk Reviews, but now there is a trend towards more specific audits initiated upfront, rather than expanding out of Client Risk Reviews. GST verifications and audits of income tax returns are also higher now in New Zealand.
How Accountancy Insurance can help
The Audit Shield service provided by Accountancy Insurance covers accountants’ professional fees and the fees of experts, should your client be subject to an Australian Taxation Office, Inland Revenue or other government agency initiated action in relation to a lodged return.
Accountancy Insurance tax audit claims are managed by a team of former accountants, which means we understand the audit process and what is involved in order for an accounting firm to best serve their clients.
This action may include phone calls and risk reviews, right through to a full audit. “Accountancy Insurance tax audit claims are managed by a team of former accountants, which means we understand the audit process and what is involved in order for an accounting firm to best serve their clients. Our turnkey process, which is made up of a combination of technological smarts delivered by hands-on people, makes the process happen”, says Roman Kaczynski, Director of Accountancy Insurance.
Audit activity is unpredictable, but when it comes to ensuring your accounting firm and making sure your clients have adequate audit activity coverage, Audit Shield is the safe bet.
Tarini Puri is the production coordinator of Acuity magazine