The annual audit is a major obligation every SMSF trustee has to ensure happens every year. Do you know what’s involved in the annual audit of your SMSF?
The Australian Tax Office shares a series of great videos that help you better understand how Self Managed Super Funds work. Below we share with you their video titled “The annual SMSF audit” and a transcript below.
Transcript of ATO video
AUSTRALIAN TAXATION OFFICE | ATO.GOV.AU
‘SMSF – THE ANNUAL AUDIT’ VIDEO TRANSCRIPT
Self-managed super funds are entitled to tax concessions on their investment income but only if they follow the rules. This includes being audited each year by a registered SMSF auditor.
SMSF auditors check that your fund complies with the super laws and that its financial statements are correct.
The audit provides you with valuable information on how your fund is going and provides assurance to the ATO that your fund is following the rules.
Meet Ash. Ash is an approved SMSF auditor, registered with the Australian Securities and Investment Commission (ASIC).
ASIC checked that he had the appropriate education, knowledge and experience to be an SMSF auditor and then listed him as an approved SMSF auditor on their website.
Meet Suzy and Kev. Suzy and Kev have an SMSF.
Each year they must appoint an independent SMSF auditor to audit their fund.
To be independent, an auditor can’t be related by family or business with the trustees.
They must appoint an SMSF auditor at least 45 days before their annual return is due to be lodged. So Suzy and Kev check the ASIC register of SMSF auditors early and appoint Ash as their auditor.
Ash gives Suzy and Kev a letter of engagement which outlines what he will do during the audit.
Ash will audit the fund’s financial position and its compliance with the super laws.
Kev and Suzy give Ash a trustee representation letter which confirms the financial statements are correct and they have complied with the super laws.
Ash needs sufficient information to audit the fund properly. Suzy and Kev give Ash signed copies of their fund’s financial statements and other SMSF documents. If Ash requests more information, Suzy and Kev must provide it within 14 days.
Once the audit is completed, Ash gives Suzy and Kev an independent auditor’s report.
If any issues were found, Ash would qualify the audit report and then work with Suzy and Kev to understand the issues and explain what they should do.
Some breaches must be reported to the ATO by the auditor even if Suzy and Kev have already fixed the problem. It wouldn’t be up to Ash, he would be required by law to report it.
Be honest and open in your dealings with your SMSF auditor. They can help you keep on track and remain eligible for tax concessions.
For more SMSF information, take a look at our other videos or visit the ATO website at ato.gov.au