SMSF Audit

What is an SMSF audit?

Under Australia’s superannuation law, all self-managed super funds must undergo a financial and compliance audit each year by an independent, registered auditor. This helps to ensure the SMSF is being managed correctly, it is complying with super regulations and is also complying with its trust deed.

The auditor will:

• Prepare an auditing plan. This includes what to do if there are anomalies or gaps in the records.
• Collect and assess evidence. This ensures that the assets listed in statements and accounts actually exist and that the documentation is correct.
• Check the validity of statements and transactions. The auditor must satisfy themselves that all transactions took place as reported and that they all complied with the trust deed rules, the ATO’s rules, and any other relevant laws relating to managing money.
• Review tax and other liabilities. Based on the income and account statements of the SMSF, the auditor checks to see if the fund’s accountants have correctly estimated the tax payable when preparing the SMSF’s annual return.
• Report on findings. The auditor is required to write up a report on what they found and provide any opinions or conclusions about the integrity of the fund, both in terms of compliance and financial management.
• Complete the Auditor’s Report. This is then provided to the fund and any concerns by the auditor must be addressed and/or rectified by the trustees as soon as possible.

How often does an SMSF need to be audited?

Every year, all SMSFs must be independently audited by an external, ATO-approved auditor. There has been discussion about moving to a three-year auditing system, but this has not yet been adopted. In any case, the proposal only applies after some years of annual returns.

How much does it cost to audit an SMSF?

Much like the costs of an annual tax return, the SMSF audit fees vary depending on the complexity of the accounts and fund setups.

For example, a simple SMSF with one member and a handful of standard investment assets will be cheaper to audit than a fund that has more than one member, has a diverse and complex investment portfolio, and is paying out some member benefits.

ATO data to the year ended June 2023 shows that the average annual audit fee ranges from $556 for a fund with assets between $50,000 and $100,00 and $1,056 for funds with more than $10 million in assets, with an average cost of $641.

Some auditors offer online SMSF audits, whereas others will want to sit down with trustees to go over the accounts. It’s important to remember though that cheap SMSF audits do not always represent good value or service.

Tips for choosing the right auditor

Some key questions to ask when looking for a reliable independent auditor for your SMSF:

• Are they properly qualified and experienced to audit SMSFs?
• Have they been approved by the ATO and undergone the proper auditor registration?
• Is the auditor completely independent of the SMSF, its trustees, and beneficiaries?
• How securely are sensitive documents stored – both physically and electronically?
• Is the firm’s size right for you in terms of personalised service, versus breadth of skill and capacity?
• Do they provide advice or information over and above the ATO’s audit reporting requirements?

References
SMSF audit - ATO
SMSF costs - ATO