Sigh… this is the response we get when introducing ourselves as the auditor of the SMSF from both trustees and administrators.
“What is the point?” “I already pay an accountant or advisor to look after my SMSF” and “Where is the value?” are usually the next comments.
This article will address, explain and dispel some of the myths around SMSF audits.
What is the point?
In short, it is required by legislation! Section 35C of the SIS Act requires trustees of SMSFs to appoint an approved SMSF auditor each financial year
The annual audit must be completed before the tax return is lodged, with the details of the auditor, the date the audit was completed and whether the audit report was qualified included on the income tax return.
The ATO (being the regulator of SMSFs) does not review or check over your SMSF each year, rather the Fund’s auditor is required to ensure that the SMSF has been run by the trustees in accordance with the SIS Act & Legislation.
Each auditor must be registered with ASIC and meet ongoing education and continuing professional development requirements.
I already pay an accountant or advisor to look after my SMSF
The auditor fits into the eco system of professionals that service the SMSF industry.
Each professional has an important and separate role to play in guiding SMSF trustees.
|Accountant||Preparation of Financial Statements, Tax Return and associated compliance. If registered as Financial Advisor with ASIC can also provide strategic advice regarding the establishment, contributions, benefit payments to and from the SMSF.|
|Auditor||Provides an annual independent audit into the compliance of the SMSF with Superannuation Rules & Regulations and also ensures that the Financial Statements are presented in a true and correct manner.|
|Financial Advisor||Provides the trustee with advice on investments, personal risk insurances and strategic advice regarding contributions and benefit payments.|
|Lawyer||Preparation of trust deeds, variations and guidance regarding the operation of the SMSF.|
Where is the value?
The auditor is engaged to provide an independent review of the Superannuation Fund’s Financial Statements and operations to ensure compliance with the SIS Act & Regulations and that the Financial Statements are presented in a true and correct manner.
The SMSF Auditor ensures that the SMSFs operations are on the right path and no shortcuts have been taken that may limit the trustees ability to pay it’s members with retirement benefits.
Your Superannuation is one of the most valuable assets that you own, so skimping on the audit cost may cost you in the long run.
Benefits for Trustees, Accountants & Advisors?
The right SMSF auditor can assist the trustees and advisors by:
- Making them aware of breaches and potential breaches of the SIS Act & Regulations and assisting all parties in addressing these;
- Streamline the process of undertaking the audit can reduce the annual compliance costs; and
- Reducing turn around time. Allowing tax refunds to be received sooner for trustees, accountants to have the ability to invoice their clients sooner and decisions to be made on the operation of the SMSF on up to date information.
Choosing the SMSF auditor that will assist and guide all parties to meeting the trustees retirement goals is the key.
Please contact Brenton Burke at MGI Parkinson for a discussion on how we can assist you.