The changeover of the new financial year has likely prompted you to start preparations for your income tax return or business activity statements, but are you up to speed on what’s required for your SMSF Audit?
Self-managed super fund ownership brings with it many responsibilities of which blissful ignorance can spell disaster and pain to your back pocket.
We help guide you through what is required for your self-managed super fund audit and how you can make sure you are fully prepared for a smooth audit experience.
SMSF Audit Basics
Why do I need to have an SMSF Audit?
In Australia, Self Managed Super Fund audits are mandatory by law and must be conducted by an auditor who is:
- Registered with the Australian Securities and Investments Commission (ASIC)
- Independent – the auditor can’t have any financial interests in the SMSF or have any personal or business relationships with any of the fund members or trustees of the SMSF
An audit is required even if the SMSF hasn’t been contributed to or if it’s paid no benefits.
💡 Did you know we can help put you in touch with an approved, independent SMSF Auditor?
What is an SMSF Audit?
The audit process is designed to assess your compliance with superannuation law and to analyse your fund’s financial statements. Your auditor is responsible for reporting any non-compliance to the ATO. All of the trustees of the SMSF will also be notified of the outcome through the SMSF audit report.
When does my SMSF need to be audited?
At the moment, your fund has to be audited annually.
The Australian government proposed a three-year audit cycle in their 2018/19 Federal Budget, which would see the annual SMSF auditing requirement be changed to once every three years (instead of every year) for those SMSFs with a clean record-keeping and compliance history. Initially, the proposed legislative change was to take effect as of 1 July 2019; however, it’s still not passed through parliament.
More to know about SMSF audits
How do I find an SMSF Auditor?
You don’t have to go far to find quality auditors; at SMSF Loan Experts, we have trusted SMSF Auditors who can provide you with full audit services.
SMSF online audits are becoming increasingly popular, but it’s essential to ensure that your online auditor has a valid SMSF auditor number (SAN). Any SMSF auditor is required to provide the SAN on any returns that are submitted to the ATO.
💡 Important to note: The Trustees have to appoint an approved SMSF auditor at least 45 days before the SMSF’s annual return to the ATO. Call us now to get the ball rolling.
What information and documents do I need to provide for my SMSF audit?
Your auditor will require all information relating to your fund’s account and financial transactions for the financial year being audited.
If you have a professional adviser who assists in managing your SMSF, such as an accountant or financial planner providing financial advice, they will be able to assist in providing the required information.
If your auditor requires anything further, the trustees have 14 days to provide it.
💡 Top tip: Check out our SMSF Audit Checklist below to see if you’ve covered all your audit bases
How much does an SMSF audit cost?
The Australian Taxation Office reports that the median audit fee has remained level at $550 for the five financial years up until 2016/17. Just over 50% of SMSFs have audit fees that fall between $500-$999.
Several factors can affect the cost of your SMSF audit, which include:
- How complex the fund is
Key events make for greater complexity such as a member commencing shifting to an income stream phase of super, adding or removing members, a member of the fund passing away, in-specie transferring assets in or commencing a limited recourse borrowing arrangement (LRBA) such as those available through SMSF Loan Experts.
- How long the fund has been operating
If your fund is only new and this is its first audit, generally, there’s more time spent to make sure everything is set up correctly.
- If you have members in the retirement phase (receiving an income stream)
- If your fund has multiple or frequent transactions occurring
- The number of members your fund has
Remember that the Six-Member Bill recently passed, allowing you to have up to six members in your SMSF now.
- How effective the fund’s record-keeping is
This is where it can be beneficial to have advisers or accountants to help with record-keeping and document management.
What can I expect to happen during my SMSF Audit?
An auditors job is no small feat. Your auditor will conduct both financial and compliance audits of your operations.
1. A financial audit will analyse all of your SMSF’s financial statements, such as your balance sheet, income statement, contributions statements, payments and withdrawals, which are generally included in your member statement. Your financial audit is conducted based on the standards set out in the Australian Auditing Standards.
2. A compliance audit will analyse your fund to make sure it has remained compliant with all superannuation legislation.
3. Once your auditor has completed the financial and compliance audits, they are required to complete an independent auditor’s report document (this is provided by the ATO). This report is 4. provided to the trustees within 28 days of the auditor receiving all the relevant documentation.
It is then the legal responsibility of the SMSF trustee to submit the fund’s audited annual return to the ATO. Thereafter, any tax obligations are required to be paid.
What happens if I’ve breached any SMSF compliance rules?
If the SMSF audit reports reveal any breaches (also referred to as contraventions) of the super legislation, then auditors must report them within 27 days to the ATO.
💡 Top Tip: Trustees should take advantage of the ATO’s early engagement and voluntary disclosure services for SMSFs where breaches remain unresolved.
SMSF Loan Experts SMSF Audit Checklist
Whilst this isn’t an exhaustive list, it should help kickstart your SMSF audit preparations:
☐ Financial Statements
☐ Member Statements
☐ SMSF Annual Return
☐ Bank Statements
☐ Fixed Interest Securities Statement
☐ Listed Shares
☐ Managed Investments
☐ Limited Recourse Borrowing Arrangement statements
☐ Related Party Investment Details
☐ Information on any other Investments
☐ Trust Distributions
☐ Trust Deed Amendment
☐ SMSF Investment Strategy
How SMSF Loans Experts can help with your SMSF audit
Being experts in the SMSF Loan world, we have several approved, proficient, and professional SMSF auditors at the ready. Find out how we can help you prepare your fund’s annual return with confidence. Get in touch with us today!