SMSF audits and admin
6 SMSF practices to look out for
If you are running your self-managed super fund (SMSF), you are a trustee so you need to comply with Australia’s SMSF laws and regulations. Trustees must not:
- Use funds to provide loans or financial assistance to members
- Mix personal and SMSF assets
- Use the fund to pay off personal debts
- Use the fund to buy assets from related parties
- Pay money to a fund member who is not retired
- Invest in assets that can benefit members before they retire (except in very special circumstances)
And similarly, as a trustee you must:
- Keep investments at arms length
- Keep full and proper documentation of all transactions using SMSF funds or assets
- Make decisions that benefit all members of the SMSF
A major requirement in the management of an SMSF, is that it is professionally audited every year.
Legislation requires that SMSFs are annually audited by an approved SMSF auditor who will undertake a full financial and compliance audit of your super fund. As trustee of the SMSF, you must provide the auditor with:
- Your fund’s financial statements
- All documents and information legally required by the auditor to make an accurate review and assessment of your fund’s transactions
A compliance audit involves assessing the administration of your SMSF to ensure compliance with superannuation laws. The financial audit looks at how and where you have invested your super funds, to ensure there are no illegal or fraudulent transactions.
What can I expect from my approved auditor?
Before starting the fund audit, the auditor will ask for a letter of representation from you. This letter is a statement from the trustees confirming that:
- the financial statements and other documents provided to the auditor are sufficient;
- there are no material transactions that have not been properly recorded in the accounting records underlying the financial report; and
- the trustees have complied with their legal obligations regarding their SMSF.
To meet the requirements of the ATO’s rules for self managed super funds, your auditor must:
- Provide you with an audit report before the due date for lodgement of your SMSF’s annual return
- Alert the ATO and the fund trustees about any concerns the auditor has regarding:
- Your fund’s financial position
- Your fund’s compliance with the super law
- Report to the ATO certain contraventions of super law that they may identify during an audit.
You can also expect an audit finalisation report from your approved auditor.