Part 1 of 3: Back to Basics
There has been a fair bit of commentary across the SMSF industry on data feeds of late – particularly around what the term ‘reliable’ means in relation to data feeds, how data feeds differ (or are they all the same?), and where ASAE 3402 and share registry data fit into the whole picture.
We’ve put together a three part blog series exploring data feeds. In this article, Part 1 of our Data Feed Series, we go back to the basics on data feeds.
Back to basics - why data feeds are important
Data feeds allow automation of data entry, saving time and greatly improving productivity. They drive automated processing and reconciliation of transactions, delivering significant efficiency improvements. Daily data feeds are also essential if accountants are to efficiently meet the real-time reporting requirements (TBAR) which are coming into effect. Quite simply, they’re the lifeblood of efficient SMSF processing.
Are all data feeds the same?
No, they’re definitely not. There are two common types of data feeds - direct-connect and email-based solutions – which differ greatly. Here’s a quick overview of where those differences lie:
Most software providers now have direct-connect data feeds from banks and financial institutions for bank transaction data, however this still isn’t the case for broker feeds – Class remains the only SMSF software provider to exclusively offer direct-connect data feeds for cash, brokers and platforms. As accountants and administrators don’t have to ask their clients to send copies of their bank statements to a third-party provider for data scraping, we don't think that contract notes and broker transactions should be treated differently. At Class we have been a leader in the market by substantially investing in direct-connect data feeds. We decided to make that investment because we recognise that they are an integral part of the service and value we deliver to our customers.
It is also worth pointing out what is NOT a data feed. Manual file imports from financial institutions are not data feeds. They require manual intervention - the person with the appropriate access has to obtain the file and then another person has to upload the file into the target system. This file handling can’t be certified as it’s not secure, given the potential that the files could be tampered with.
Why are daily, direct-connect data feeds so important?
Firstly, let’s talk about administration:
Next, we need to consider the end investor:
Historically, auditors have gone and checked the holdings for share investments directly from the registry. This is usually done by visiting the share registry website (Computershare, Link, etc.)
Auditors are also able to rely on balance confirmation data from other sources, but only if that data comes with an appropriate certification e.g. ASAE 3402.
What an auditor cannot do is rely on second-hand information unless it is certified. This means that statements, contract notes, registry balance checks, even bank confirmations etc. are useless for audit purposes if they come from the investor, the planner, the accountant or any other non-audited secondary source.
“The ASAE 3402 allows us to be more efficient internally and externally with the SMSF auditor and audit process. We are spending less time chasing paperwork which gives our team more time to work on funds.” Krish Sritharan, Managing Partner, Super Centric
Read now: Data Feeds - The Facts That Matter. Part 2 - Why ASAE 3402 Matters.
Read now: Data Feeds - The Facts That Matter. Part 3 - Brokers vs Share Registries.