The work of SMSF auditors does not end with just SMSF audits. Their work also gets reviewed by none other than the ATO. That’s why SMSF auditors are expected to be always vigilant. If you are wondering what the ATO looks for in SMSF audits, we have got the answers.
Points that ATO looks for in an SMSF audit
1.
Threats to the SMSF auditor’s
independence
To make sure that
there is no such threat, the ATO usually ensures that:
●
SMSF auditors have not audited
their own or immediate family’s fund.
●
Auditor or the audit firm’s
employees have not prepared the SMSF accounts.
●
Auditor wasn’t involved in a
reciprocal arrangement i.e. if two independent auditors were not auditing each
other’s SMSF.
2.
Completion of audit documentation
In this regard, the
ATO focuses on the following areas:
●
If the written audit plan and
strategy are there on the file along with the audit checklist.
●
If the signed engagement letter
confirming the year of the audit is there.
●
If the signed copy of the
representation letter signed by the trustees covering all the provisions of
SMSF laws for the year of the audit is there on the file.
●
Signed SMSF audit report in an
approved form.
●
Auditor’s opinion with proper
evidence supporting the opinion.
3.
Availability of evidence relating
to SMSF audit
The audit report
that the SMSF auditor issues is based on proper evidence. The ATO would like to
make sure that evidence supports the opinion expressed by the SMSF auditor in
the audit report. The ATO would look for evidence for the following things:
●
Existence of assets reported in
the financial statements
●
Whether the ownership of the
fund’s asset is in the fund’s name only
●
Completeness and correctness of
the financial transactions
●
Whether correct accounts have been
used to record the appropriate balances
●
Valuation of assets, liabilities,
and entitlement
●
Trust documents to verify if the
fund meets the definition of the SMSF
●
Whether the audit procedure was
conducted on the signed financial statements or not.
●
Whether the investment strategy of
SMSF is being followed, updated, and reviewed on a regular basis.
●
That the SMSF does not have any
borrowings unless the SMSF meets the borrowing exception.
●
That the funds have no in-house
asset.
4.
Relating to Audit conclusion
The ATO looks into
the appropriateness of the auditor’s opinion in the audit report by looking for
the major incorrectness of balances in the financial statement.
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