The role of an approved SMSF auditor is an important one. SMSF Trustees are required to appoint an
approved SMSF auditor to audit their Fund each year.
What does the audit involve?
The approved SMSF auditor is required to audit, not only the financial statements of the Fund,
including verifying assets values and proof of ownership, but also to monitor and report on whether
the Trustees have complied with the Superannuation Industry (Supervision) Act 1993 and
Regulations 1994 (“SIS Act and Regulations”).
Referring to an ‘approved’ SMSF auditor means the auditor must be a SMSF Auditor registered with
ASIC. Prior to being registered, the auditor must have passed an exam as well as been able to prove
they have sufficient audit experience. Once registered, the auditor must keep up to date with their
continuing professional development and report their auditing hours to ASIC.
The audit is required to be conducted on an annual basis, with the audit report date included in the
Fund’s annual tax return. The audit is therefore required to be completed, usually, by 15 May of
There was suggestion by the Government in the 2018 Federal Budget to require an audit be
conducted every 3 years instead of annually. The thought process was this would reduce costs and
administration burdens to the Trustees. However the Opposition rejected this idea on the basis that
3 yearly audits would be just as onerous and costly as annual audits, if not more so. Furthermore,
there would be serious impacts from compliance issues remaining undetected for up to 3+ years.
In recent times, there has been a strong focus from both the ATO and the accounting bodies on and
auditor’s independence. From 1 July 2021, accounting firms were no longer allowed to audit SMSFs
where they were involved in the preparation of the financial statements. All audits must now be sent
to an external auditing firm to remove any threats of self-interest, familiarity and intimidation. Note
however this recent move has also led to greater auditing costs to the Trustees, and time delays in
the issuing of audits.
Recent Compliance Issues for SMSFs
As mentioned earlier, the audit of a SMSF has a compliance component as well as a financial one.
Compliance issues currently on the ATO’s radar – and issues your approved SMSF auditor should be
bringing to your attention – are:
- Investment scams and ID fraud – the ATO have reported they are coming across people impersonating financial advisors who are convincing individuals to set up a SMSF, roll their benefits over from their APRA fund, and then either use those benefits to invest in a risk scheme and/or steal those funds from that member. As a result the ATO are keeping are closely monitoring newly established funds who receive rollovers and them immediately access benefits. They are also keeping an eye on licenced and unlicenced promotors of illegal early access schemes.
- Early access to funds – accessing super benefits before a condition of release is met is not only one of the most common compliance risks, but it is also illegal. The ATO are pouringmore resources into this area with the end result being harsher penalties than ever before(such as disqualifying Trustees and deeming the fund to be non-complying and taxing the assets – not income – at 47%).
- Non-lodgement of tax returns – the ATO have seen an increase in non-lodgement which is of concern. Non-lodgement can lead to the Fund being non-complying. This prevents SMSFs from receiving rollovers and contributions. A recurring history of non-lodgement can lead to the Trustees being removed and banned from acting in the future.
- Other contraventions including loans to members and their relatives and the in-house assets exceeding the allowed 5% level.
For further information contact TSP Accountants and Business Advisors on (02) 4926 4155 or email
email@example.com. TSP Accountants has 3 approved SMSF auditors ready to assist you with
your SMSF auditing requirements.