End-of-year SMSF audit considerations
SMSF auditors will potentially require additional independent evidence of the existence of SMSF assets following the Melissa Caddick case, says an expert from a leading global financial firm.
The value of assets is even more crucial as SMSFs prepare for their end-of-year reporting, said Paul Rafton, national leader, superannuation for BDO.
“Understanding the complexities of the SMSF audit process is paramount to ensure your fund is compliant,” Mr Rafton said.
Mr Rafton said in the wake of the high-profile Caddick case and the missing millions there are key considerations and specific requirements that apply to SMSFs and trustees can do several things to assist their auditor and avoid delays or qualified audit reports.
“Managing an SMSF means complying with a range of regulatory requirements, including the need for an annual audit,” Mr Rafton said.
“This audit is designed to ensure that the SMSF is being managed in accordance with the Superannuation Industry (Supervision) Act 1993 and other relevant regulations.”
He said one of the most important things a trustee can do to support the audit process and avoid delays is to maintain transparency, accuracy, and proper documentation in financial reporting.
“That means maintaining clear and accurate records,” he said. “Keep your financial records well-organised and up to date. This includes financial statements, ledgers, bank statements, invoices, contracts, and any other relevant documentation," he said.
“Ensure that financial reports are prepared in a timely manner and are free from errors. It’s also important to comply with accounting standards and follow the relevant accounting standards and regulations that apply to the SMSF.”
He continued that segregating assets is a must.
“Implementing proper segregation of assets between your SMSF and personal/business assets is paramount to ensure the fund complies with the SIS Act,” he said.
“A trustee must also provide supporting documentation and be prepared to provide supporting documents for all significant transactions and account balances. “
He said the auditor will most likely request evidence to verify the accuracy of the fund’s financial statements.
“In particular, providing copies of investment reports and distributions as soon as they become available will assist in the audit process,” he added.
Finally, the auditor will also require the trust deed and governing rules so it is imperative the trustee ensures they are up to date.
“By following these guidelines, you can contribute to a more efficient audit process and reduce the likelihood of qualified audit reports or delays,” he said.
“If an SMSF’s annual tax return is not lodged with the ATO by the due date, the fund will have its regulated SMSF status removed and will not be able to receive contributions or rollovers until the fund’s lodgements are brought up to date.”
