SMSF Audit Requirements – What to expect to provide when engaging with an SMSF Auditor.

SMSF Audit requirements

Running an SMSF whilst can be difficult at times is made even moreso when it comes time to do your annual SMSF Audit. SMSFs are required to be audited annually and before a specified date set out by the ATO. So, what is really involved in an SMSF Audit and what are the SMSF Audit requirements?

When you first present as a client requiring an SMSF Audit, some important requirements need to be met. These are not made up requirements - they are enshrined in the standards and backed up by legislation.

The Pre-Audit Check – Here im looking for potential reasons to decline an audit - I tend to ask myself questions such as:

·         Do the files look complete and in order?

·         Does the information (text / images) contained in the documentation look clear enough to read?

·         Does the information in the files look legitimate and unedited?

·         Do the financials present well in addition to being acceptable, compliant financial statements.

·         Have all of the permanent documents been supplied?

·         Have the the prior year’s financial statements included?

·         Have the prior year’s audit report and management letter been included?

·         Did the prior year’s SMSF auditor pick up on any financial audit or compliance issues in the prior year?

·         Have the accounts for the current year been signed off by at least 2 trustees or 50% of the trustees in the case or more members.

·         If it’s only a sole signatory – is the trustee corporate and its sole director is signing?

·         Is the accountant and trustee sufficiently proficient with computers?

·         Are there trustee capacity issues?

·         Have there been any objections or concerns with any past requirements either with me or with a prior auditor?

SMSF Audit requirements: A complete audit process:

A typical auditor’s method for conducting an SMSF Audit tends to be as follows:

1.      We conduct a pre audit check

2.      We plan an audit

3.      We perform the audit procedures

4.      We query the client or We conclude on an audit

In amongst the above is how an auditor comes to know what SMSF Audit Requirements exist for your super fund audit – which I’ll explain below.

Accountants & SMSF Administrators - when it comes to engaging with Simply SMSF Audits you will most likely need to provide (As applicable):

Permanent:

• A Trust deed & any amendments – complete, signed dated witnessed (Index Z)

• ATO Trustee Declarations (originals) – wet ink signed dated and witnessed (Index X)

• Investment strategy prior to and in the current year of audit (Index X)

• Any other permanent documents you have (Index X)

Audit Evidence:

•   Current years and prior years Financial position, statement of income, notes to the financial statements – signed off copies (Index A)

• Members statements – separated by superannuation interest (i.e Accumulation interest, pension interest 1, pension interest 2 etc) (Index A)

•   Trial balance and ledger accounts (Index F)

• Annual minutes - signed (Index C)

• Investment summary report (Index L)

• Investment income report (Index S)

• The SMSF Annual return (Index G)

• Prior years Management Letter and Audit Report (Index D)

• Audit Engagement Letter – signed (Index C)

•   Trustee Representation Letter – signed (Index C)

Source Evidence:

• Bank statements (index N)

• Listed security statements | Broker Reports | Registry Holdings statements (index L)

• Unlisted entity financial statements, security certificates, security register, evidence of underlying assets (Index L)

• Real estate valuation and ownership evidence (index M)

• Term deposit statements (index N)

• Cryptocurrency statements or other evidence (index O)

• Loan agreements (index O)

• Collectable and Bullion statements (index O)

• Limited recourse borrowing arrangement deed (index P)

• Borrowing statements and agreement from the lender (index P)

• ATO Portal Tax reports (index Q)

• Actuarial certificates where pensions are involved (index Q)

• Investment income source evidence such as dividend | Distribution | Tax statements | Interest summaries etc (index S)

• Lease agreements | Rental income statements or summaries (index S)

• Any contribution related info (index T)

• All larger expenses i.e Accounting | Property | Investment management fees | life insurance (index W)

• Rollover in statement(s) and ESA report(s) (index U)

• Rollover out statement(s) and ESA report(s) (index V)

• Pension related info such as Pension commencement & pension commutations (where applicable) (index V)

• Other evidence as applicable (index as appropriate)

The Above is not exhaustive. The audit process is complex and thorough. Only through experience and professionalism can an SMSF Auditor quickly clarify what you need to provide exactly, and what is missing.

If you needed clarity on any of the above please contact Simply SMSF Audits.