The regulator stated that good audit documentation not only supports an auditor’s conclusions but is essential for meeting their obligations under Auditing Standard ASA 230
The audit documentation outlines how audits must be documented and that inadequate documentation is one of the most common reasons it refers SMSF auditors to ASIC.
ASA 230 requires SMSF auditors to document enough detail to allow an experienced auditor with no previous connection to the audit to understand the nature, timing and extent of the audit procedures performed as well as the results of the audit procedures performed.
The audit evidence obtained must also clearly be understood as do any significant matters arising during the audit and the conclusions reached and significant professional judgments made.
There are a number of issues the ATO has found when it is reviewing audit files including that the notes fail to explain how the auditor reached their conclusions or assessed the fund’s compliance with superannuation laws and regulations.
Additionally, there is an issue with procedures or checklists showing only a “tick”, without any supporting explanation and that the notes in procedures or checklists use vague or minimal detail such as “market value ok” without describing the evidence obtained or how it was evaluated.
Furthermore, the ATO has found in its review that notes misrepresent the fund’s actual circumstances such as “LRBA ok” when the fund has no borrowings and that identical notes appear across different audit files, which suggests the auditor didn’t tailor their work to each fund.
To maintain registration under section 128F of the Superannuation Industry (Supervision) Act 1993, an SMSF auditor must comply with the Auditing and Assurance Standards. This includes ensuring audit file notes meet the documentation requirements of ASA 230.
