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What is an SMSF audit? How do you do it?

 Self-managed super funds are a great choice when it comes to investments and financial independence. However, running an SMSF is not a child’s play. There is a lot to take care and SMSF audit is one of those mandatory requirements that should be met.  

SMSF auditing should be done by SMSF auditors registered with the Australian Securities and Investment Commission (ASIC). Approved SMSF auditors are required to carry out the financial as well as compliance audit for the superfunds.  Not sure what superannuation audit is all about? Read on! 

What is an SMSF audit? 
The SMSF laws require an SMSF to be audited annually. Australian SMSF audits can be categorized into two parts: 

  1. Financial audits: While performing financial audits, super fund auditors check whether the financial statements of the SMSF are accurate or not.  

  1. Compliance audits: The purpose of the compliance audit by the SMSF auditor is to make sure that the SMSF is compliant with the SMSF laws. 


Once the super fund audit is completed, the SMSF auditor issues an audit report in the predefined form. This report is lodged with the ATO and the auditor needs to report any compliance breaches that the auditor observed during the SMSF audit.

How to do an SMSF audit? 

Financial Audit 

The financial audit is to be done keeping in mind the Australian auditing standards. For completing a financial audit, you as an auditor need to do the following: 


1. Preparation of the audit plan keeping in mind the level of risk of misstatement in financial statements. 


2. Collection and verification of evidences that supports the material account balances and transactions in signed financial statements. 


3. Perform testing of information present in financial statements. Areas that can be tested include the following: 

   

  • * existence of assets, entitlements, and liabilities 

  • * occurrence of transactions 

  • * completeness of transactions, events, and assets being recorded 

  • * ownership of SMSF for assets, liabilities, and entitlements 

  • * classification of events, and so on 

4. Review of tax calculations and allocation of tax expenses and benefits to the member’s account. 

5. Forming and documenting the conclusion about the accuracy of the financial statements based on evidence gathered in the independent auditor’s report. 

Compliance Audit 

In compliance audit, the SMSF auditor analyses the fund’s compliance with the superannuation laws. The SMSF auditor performs the following tasks: 
  1. Consideration of materiality and risk involved. 
  2. Gathering sufficient evidence to support your conclusions. 
  3. Testing the identified contraventions against the ACR reporting criteria. 
  4. Documenting conclusions and opinions in writing 
  5. Reporting of the professional opinion in the approved independent auditor’s report.       




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