Self-managed super fund (SMSF) trustees are required to appoint an ATO-approved SMSF auditor no later than 45 days before lodging their SMSF annual return. An SMSF auditor is a professional who assesses your fund’s compliance with superannuation law and examines your fund’s financial statements.
Your SMSF auditor must be:
- Independent. SMSF auditors cannot audit a fund that they hold financial interest in, or have a close personal or business relationship with the SMSF members or trustees.
- Registered with ASIC (Australian Securities & Investments Commission) and holds an SMSF auditor number for you to provide on your annual return.
What will your SMSF auditor do?
An SMSF auditor provides you with an independent opinion on the existing assets in your SMSF and whether or not your fund complies with the rules outlined in the Superannuation Industry (Supervision) Act 1993.
When preparing for an audit, an SMSF auditor will issue a Terms of Engagement Letter to the trustee(s) of the fund, which includes the roles and responsibilities for parties involved in the audit as well as the range of the audit. In the case that your SMSF auditor’s primary contact is your accountant, your accountant will be issued a separate Terms of Engagement Letter.
By clearly outlining each parties’ capabilities, a Terms of Engagement Letter helps you, your accountant and your auditor to avoid any misunderstandings and also protects audit evidence provided by your auditor from unintended alterations. In turn, SMSF auditors who fail to follow standards or take shortcuts can be sued or imposed penalties by the Court.
The Terms of Engagement Letter also acts as a contract to keep parties accountable during compliance breaches and prevents cases of ‘opinion shopping’ where trustees look to other auditors for unqualified opinions. Trustees may end up being audited by the ATO in the event that they breach the Terms of Engagement Letter and ‘opinion shop’, as it comprises auditor independence.