As Trustee of a Self-Managed Superannuation Fund you are required to have an independent audit completed each financial year. It is the Auditors’ responsibility to provide an independent assessment of the Trustee’s compliance with both the trust deed and the current legislation.
The Audit comprises a financial audit and a compliance audit.
Financial Audit
As part of the financial audit, your SMSF Auditor will analyse the financial statements of the fund in accordance with Australian Auditing standards. Where there is an increased risk of material misstatement in the financial report the auditor often has to conduct further investigation and requires additional verification.
For example, an increased risk would apply, and further audit scrutiny would be required, if the Fund had an investment in an unlisted company, or was unable to provide an annual statement for an investment. The auditor needs to be satisfied that these assets exist, the fund correctly holds these assets, they are not mixed with personal assets of the members and that the financial statements correctly disclose the assets at their market value.
Compliance Audit
The compliance audit involves a review of the SMSFs compliance with the superannuation and taxation legislation. This includes assessment to determine whether the investments are made for the sole purpose of funding members’ retirement and whether your fund’s investments are in line with the investment strategy to name a few.
Your auditor will require information to verify both financial and compliance matters. This is why the auditor needs investment statements and audit certificates as well as copies of all trust deeds and minutes of trustee’s decisions.
Where you as a trustee have failed to adhere to (and breached) the superannuation legislation the auditor will notify you of this, and where possible provide guidance. Where a breach is significant, repetitive or specifically required to be reported by the regulatory authorities your Auditor is also required to lodge a contravention with the ATO.
Your auditor is bound by professional and legal obligations and therefore a robust audit process must be followed every year, even where you may not have had a prior contravention.
While at times, you may feel that this process seems excessive, with the auditor often needing more information than your Fund Administrator, a thorough and robust audit is always in your best interests. Not only does a robust audit reduce the possibility of direct intervention by the Australian Taxation Office, picking up on any Audit concerns in a timely manner allows the Trustees to fix compliance issues as soon as possible, and can stop minor issues becoming major ones.
We can help.
If you have any questions or concerns about your SMSF compliance, please contact one of our experienced SMSF team members today.
Jes Wilkinson is a SMSF Specialist Advisor™
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