No two SMSF audits are the same
Promoted by Evolv Super
No two self-managed super funds are identical so it stands to reason that no two SMSF audits will be the same. Daria Galstyan CA, Associate Director – Audit at Evolv, explains why this matters.
When it comes to selecting an independent SMSF auditor, it pays to bear in mind that the whole exercise should be much more than a ‘tick and flick’ process, and that communication between an auditor and the accounting and advisory firms is a critical in the process.
As Galstyan observes, “A key area we focus on is the risks associated with the various types of investments held within the fund, whether it’s shares, property or any other asset class.
“SMSF trustees all have different risk appetites. Some will be conservative and hold assets such as cash and property. Others have a higher risk appetite, opting for high risk assets such as unlisted companies and speculative investments like cryptocurrencies.”
For accounting and advisory firms, this variation makes it essential to look at how this has been considered by the trustees within their investment strategy, together with whether they truly understand the application of the compliance framework and associated compliance issues with holding such assets within a SMSF.
Importantly, Galstyan says some SMSF trustees may believe they understand in full the relevant compliance application for complex assets and transactions, and act independently without consulting their SMSF specialist adviser and SMSF auditor. Mistakes can easily be made that draw unwanted scrutiny from the Australian Taxation Office (ATO), and heighten the risk of an ATO audit.
This is where the choice of an independent SMSF auditor can make a valuable difference.
Collaboration and consultation are vital
While it can be tempting to use audit turnaround times alone as a measure for selecting an independent SMSF auditor, Galstyan believes there are good reasons to focus on communication.
“No accounting and advisory firm wants an auditor who takes a ‘tick and flick’ approach and isn’t interested in getting in touch with the firm at other times during the year.
“The SMSF audit relationship should go much deeper. Communication is an especially important part of the process. In fact, it is the essence of it all.
“Accounting and advisory firms need to have assurance that if they have a query during the course of the financial year, they can reach out to the auditor. From here, the facts will be checked, and the auditor will come back with a position on the topic that allows accountants to present the issue back to SMSF trustees in a timely manner.”
Galstyan continues, “Good communication centres around consultation and collaboration. At Evolv, our accounting and advisory firm clients know they can reach out to us with a simple phone call to clarify a matter at any time. It makes the audit journey smoother for the accounting practice and delivers a better experience for their SMSF clients.
Ensuring a smooth audit
A smooth audit encompasses a good process in conjunction with collaboration and consultation with your auditor. Galstyan explains, “Ensuring a smooth audit involves an auditor following a rigorous process explaining to clients the information required from an audit perspective.
“If a client has a compliance issue or concern, it’s a must they talk to an auditor upfront to ensure the audit process tracks without any surprises.”
To ensure a high-quality audit, an auditor will apply a consistent approach to every audit. “At Evolv, all our audits are highly process-driven, and our team is exceptionally careful about following our audit procedures”.
Furthermore, a smooth audit is not dependent on a dedicated headcount. “When an audit is consistent and high-quality, auditors can step in and out of the process at any stage,” says Galstyan. “This approach not only removes key person risk from our audit process, but if an auditor is out of the office, someone else can effortlessly step in and manage the audit.”
Why does my auditor ask questions?
According to Galstyan, accounting and advisory firms often assess the quality of a SMSF auditor based on the number of queries that arise during the audit. She says, “This probably isn’t the best indication of audit service provisions.
“It’s also one of the drivers behind Evolv’s commitment to encourage accountants to ask questions upfront so that we have a full picture of the SMSF.
“Evolv doesn’t ask basic questions – we’re commercial and consistent. This is very important.
“It’s also about working hand-in-hand with our accounting and advisory firm clients so that we have sufficient and appropriate audit evidence. This way there is a low chance that surprise issues will be raised during the course of the audit.”
Finally, no two audits are the same, and to ensure a smooth process, accountants and advisory firms should aim to collaborate and consult with their auditor. Having a good relationship, and open and frank communication lines regarding any possible compliance issues will ensure smooth sailing for every audit.