At the end of each financial year your Self-Managed Super Fund will need to be audited by an independent third-party SMSF auditor.
Having your SMSF audited isn’t exactly exciting, but it is an essential part of the compliance process. Looking to save money on the audit by going for a cheap service may come back to bite so I always recommend paying a decent fee to an experienced auditor is worthwhile. If they are not doing at least 25 audits a year then don’t use them as experience is crucial and it is necessary to have knowledge of what to look for and how to guide you the ultimate client.
The SMSF audit involves a review of your fund and the strategies and transactions during the year to ensure it remains a ‘complying fund’ in line with the ATO’s definition.
Who can audit my SMSF?
Your SMSF can only be audited by an approved SMSF auditor. SMSF auditors are most commonly qualified accountants; however there are some additional requirements.
Members of the following organisations are qualified SMSF auditors:
- SMSF Specialist Auditors, accredited by the SMSF Professionals’ Association of Australia (My personal preference)
- CPA Australia
- The Institute of Chartered Accountants Australia
- National Institute of Accountants
- Association of Taxation and Management Accountants
- Fellows of the National Tax and Accountants Association Ltd
SMSF Specialist Auditors, as appointed by the SMSF Professionals’ Association of Australia, are also qualified to complete this important SMSF function.
SMSF Audit Check-list
The person performing the SMSF audit will require a number of documents and may seek these from your Administrator, accountant or directly from you the Trustees. The auditor will generally have a standard SMSF audit check-list, however the following will give you some guidance on what you are generally asked to provide:
- Financial statements of the fund.
- Cash Management and Bank statements for all fund accounts including Cheque, Savings and Term Deposits.
- Managed fund /Wrap annual transaction and income report.
- Share Broker’s statement showing all transactions.
- Holding statements for all shares held during the year and the end of year balance.
- Buy & sell contracts for all shares held during the year including Off Market Transfers and any corporate actions.
- Statements showing clearly the ownership of all fixed interest securities like bonds, hybrids and notes.
- Contracts for any property purchased or sold
- Copy of the Title deed showing evidence of ownership for any property in the correct name.
- Property valuations and updated if starting a new pension.
- Building & Liability insurance certificates of currency
- Lease agreements and rental income statements
- Documentation for any art or collectables including evidence of Insurance in the name of the SMSF.
- Details of any debts owed by the SMSF including loan statements showing repayments
- Documentation of any related party loans or investments
- Confirmation of any contributions or withdrawals
- Confirmation that the member is eligible for contributions or meets a condition of release for withdrawals
- Pension or lump sum benefits payment details including copies of Pension Agreements and minutes.
- Information on any other investments not mentioned.
- Completed SMSF Investment Strategy in writing including consideration of members’ insurance needs.
This is not an exhaustive list and your SMSF auditor may require additional documentation.
For further information on the issues raised in this blog please contact our Castle Hill SMSF Centre or Windsor Financial Planning Office. While we are not auditors we can point you in the right direction of people you can trust.
I hope this guidance has been helpful and please take the time to comment. Feedback always appreciated. Please reblog, retweet, put on your Facebook page if you found information helpful.
Liam Shorte B.Bus SSA™ AFP
Financial Planner & SMSF Specialist Advisor™
Tel: 02 98941844, Mobile: 0413 936 299
PO Box 6002 BHBC, Baulkham Hills NSW 2153
5/15 Terminus St. Castle Hill NSW 2154
Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572
This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.
Cindy
/ November 21, 2013I always recommend too to get the best auditing service even if it cost a little higher, risk shouldn’t be an option here.
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Roland Knight
/ June 18, 2013Liam, I can’t believe you did not even mention the NEW investment strategy required from the 7th August 2012. shame shame shame
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The SMSF Coach - Liam Shorte
/ June 18, 2013Hi Roland and thank you for pointing out that I forgot to include the need for a written SMSF Investment Strategy which I must add should also include consideration of the insurance needs of the members. Also if you are undertaking an LRBA then the risk assessment should be included in the SMSF Investment strategy as best practice.
I have added the SMSF Investment Strategy to the list.
I had done a full blog on this last year and it can be read here: http://thesmsfcoach.com.au/2012/08/22/self-managed-super-funds-must-include-an-insurance-needs-analysis-as-part-of-the-funds-smsf-investment-strategy/
Hope you enjoy the blog.
Come on people I surely have missed other items!
Liam
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