Self-managed Super Funds Auditing (“SMSFs”) are a specific type of superannuation fund which have up to six members and are regulated by the Australian Taxation Office (“ATO”). The ATO requires an SMSF audit to be carried out prior to an annual return, even if no contributions or payment are made during the year. In the past, the same accounting firm was permitted to perform both accounting and audit services to SMSFs. However, this was changed following the release of APES 110 Code of Ethics for Professional Accountants in early 2021. The new guidance, issued by the ATO, stipulates that the audit and accounting functions for a SMSF must be carried out by separate service providers. 

SMSF Trustee’s legal obligations

It is a legal obligation that the SMSF trustee must have the fund audited every year before lodging the fund’s income tax return. The trustee is required to appoint the SMSF auditor no later than 45 days before the annual return due date. At the time of engagement, the SMSF trustee will be presented with a letter of engagement outlining the scope of the audit as well as the responsibilities of each of the respective parties. 

The SMSF audit is usually straight-forward and requires the trustee to provide the auditor the following materials:

• Documentations regarding the SMSF transactions and investments；
• A trustee representation letter which states that the financial statements are correct and compliant with the applicable legislations。

When more information is requested by the auditor, the trustee must provide the information within 14 days.

The SMSF trustee is also required to work with the auditor to rectify any breaches as soon as possible and voluntarily disclose any unresolved breaches via the ATO’s early engagement and voluntary disclosure services.

SMSF auditor’s legal obligations

A SMSF auditor is responsible for independently examining the SMSF’s assets, liabilities and transactions to ensure that the financial records are valid and accurate. The SMSF audit also needs to assess if the SMSF is compliant with the relevant Australian superannuation rules. 

A SMSF auditor must:

• be registered with the Australian Securities and Investments Commission (ASIC) as an approved SMSF auditor
• have a valid SMSF auditor number (SAN)
• meet ongoing obligations as prescribed by the

             - Superannuation Industry (Supervision) Act 1993 (SISA)

             - Superannuation Industry (Supervision) Regulations 1994 (SISR), and

• comply with ongoing ASIC registration requirements including

             - keeping your auditor details up to date

             - lodging your annual statement 

A SMSF auditor must be independent to ensure the objectivity and integrity of the audit, that is, the auditor:

• does not have any financial interest in the SMSF, or
• have personal or business relationships with fund members or trustees

When the audits are finalised, the SMSF auditor must complete an independent auditor’s report document supplied by the ATO. The auditor is also required to provide this report to the trustees of the SMSF within 28 days after having received all relevant documentations.

If any breaches have been identified during the audit process, the SMSF auditor must report them to the ATO within 28 days using an ATO-provided contravention report document.

Chang Accounting Advisory Pty Ltd, we are CPA practice and tax agent. If you or your families or friends need our services, please feel free to contact our team for any assistance. 

This article is for informational purposes only and does not form part of our advice. This article is based on guidance from Australian Taxation Office. Please contact our team if you need any assistance.

Claire Chang, 0497 131 419, claire.chang@changadvisory.com.au, wechat: clairechang26

Michelle Cui, 0433 539 870, michelle.cui@changadvisory.com.au, wechat: michellejc