The world of self-managed super funds is ever-changing and sometimes hard to stay up to date with. For that reason, many of our SMSF clients ask us to manage the fund for them. Our SMSF accountants and SMSF auditors keep up with any changes in legislation and advise clients on how best to deal with them. This includes these recent, important changes to how SMSF funds may be audited.
About The SMSF Audit
By law, an SMSF trustee must engage an independent auditor to audit the fund before lodging the SMSF tax return with the ATO. The audit checks the SMSF’s assets, liabilities and transactions, and ensures the fund is complying with superannuation rules (known as SIS compliance). To conduct the audit, your SMSF auditor will paperwork such as bank statements and investment documentation, including shares, dividends, contract notes and property documentation.
Separating Audit And Accounting Functions
Recent updates to independence guidelines issued by the Accounting Professional & Ethical Standards Board (APESB) have changed how SMSF audits are conducted. Specifically, SMSFs must be audited each year, and the auditor must be independent from both the fund and the accountant or administrator who prepares the financial statements. Previously, many SMSF accounting practices (like Vault) conducted accounting and audit services within the same firm. Now they need to separate these functions by outsourcing SMSF audits.
How Audit Changes Affect SMSF Trustees
If your Vault SMSF accountant does both the accounting and the audit of your SMSF, this will soon change. We will refer your audit to a qualified and competent SMSF auditor. We can still facilitate the audit process to make sure the process is seamless. Of course, because the auditor is engaged by the trustee, sometimes the auditor will want to communicate with you directly. If this affects you, we’ll be in touch with you to discuss this further.
The Auditor’s Focus For FY2021
For the 2021 financial year, SMSF auditors are focusing on key areas, including the impact of the COVID-19 pandemic, as well as bushfires, floods and droughts. The SMSF audit should not be difficult or overly stressful. Generally, the auditor will ask only for documentation that trustees will already have.
Some of their key focus areas for this year include:
Benefit payments – Auditors will check documentation to support the distinction between pension payments and lump sum benefit payments. They will also check release authorities for any COVID-19 early access withdrawals.
Property valuations – Auditors will check whether property asset valuations have been affected by recent events. They may need a new valuation, as advised by the ATO.
Property and rental relief – Auditors will check whether trustees offered rental relief to tenants during the pandemic. They will check correspondence between the SMSF and tenant, and any documentation provided by the tenant to support their request.
Private investments – Auditors will check documentation for any private entities (private trusts or companies) and how trustees determined the market value for their investments. They will check for documentation that supports the valuation.
Investment strategies – The ATO has asked SMSF trustees to review their investment strategy in light of events over the last two years. The auditor will check for evidence that trustees have considered whether these events have affected the fund’s circumstances and investments.
Want To Know More?
If you’re an SMSF trustee and want to know more about SMSF audits or how recent changes will affect you, contact us to find out more.