A number of auditors were also referred as a result of failing to meet the independence requirements by conducting in-house audits and by failing to demonstrate they had the necessary practical experience to carry out SMSF audits.

The ATO said it also focused on educating auditors through market valuation and disqualified trustee reviews. Fifty-one auditors received targeted guidance to help them meet their obligations.

The most common compliance issues identified from the auditor reviews were a lack of evidence to support that:

• Fund transactions were at arm's length (section 109).
• Fund assets were correctly reported at market value (regulation 8.02B).
• There were no charges over fund assets (regulation 13.14).
• The fund's limited recourse borrowing arrangement had met the borrowing exceptions (section 67, 67A).

It also found many auditors' files contained unsigned financial statements (section 35B).

The Tax Office said its high-volume auditor program continues to be effective, with ACR lodgments rising from 2.2 per cent to 3.6 per cent following reviews.

It said it would keep a strong focus on this group in 2025–26, along with high-risk auditors, auditors conducting in-house audits and auditors who may be failing to conduct adequate compliance checks in relation to ensuring trustees value their assets at market value each year.

In February, the ATO issued guidance on its focus regarding auditor compliance for 2025, noting that more than 32,000 new funds entered the sector in 2024, an increase of 21 per cent from 2022–23, with the SMSF population growing to over 625,000 and holding more than $1 trillion in assets.

It emphasised the critical role that SMSF auditors play in maintaining the health and integrity of the sector and the importance of understanding their obligations, including what the ATO considers the biggest risks in 2025.

As previously highlighted by the ATO, it is again heavily scrutinising market valuations and reminded approved SMSF auditors that they are responsible for verifying and retaining sufficient audit evidence to support the market value of assets.

It said: “Where there's insufficient evidence you must consider modifying the independent auditor's report (IAR). You must also lodge an auditor contravention report (ACR) where the reporting criteria is met.”