SMSFs are managed by their members, rather than professional fund managers, it is important for trustees to ensure that the fund is run in accordance with the law and that all compliance requirements are met. One of the key ways to do this is through an SMSF audit.

An SMSF audit is an independent examination of the fund’s financial statements and records, carried out by a qualified auditor. The purpose of the audit is to provide assurance that the fund’s financial statements are accurate and that the fund is operating in compliance with the Superannuation Industry (Supervision) Act (SIS Act) and its regulations.

An SMSF audit report is a legal requirement and must be included with the fund’s annual financial statements and lodged with the Australian Taxation Office (ATO) and the Australian Securities and Investments Commission (ASIC).

An SMSF Audit Management Letter (AML) is an additional document that the auditor is allowed to issue to the trustee, which is not required to be lodged with the ATO or ASIC. It is a letter that the auditor uses to highlight to the trustee any issues that have been identified during the audit process, which the trustee should take into consideration going forward. The AML will also point out any areas where the trustee should improve their processes to ensure compliance with the SIS Act and its regulations.

The AML is an important document for SMSF trustees, as it provides them with valuable feedback on the fund’s operations and helps them identify areas for improvement. Trustees should carefully review the AML and take any recommendations into account when making decisions for the SMSF.

It is important to note that SMSF trustees have a legal responsibility to ensure that the SMSF is operating in compliance with the law. If the AML highlights any non-compliance issues, it is the trustee’s responsibility to take action to rectify the issue as soon as possible.

In conclusion, SMSF audit is an essential part of ensuring that the fund is run in accordance with the law and that all compliance requirements are met. The SMSF audit management letter provides valuable feedback to trustees and helps them identify areas for improvement, allowing them to make informed decisions for the SMSF.

References:

  1. Australian Securities and Investments Commission. (2020). SMSF auditors. Retrieved from https://www.asic.gov.au/regulatory-resources/superannuation-and-retirement/self-managed-super-funds/smsf-auditors/
  2. Australian Taxation Office. (2021). SMSF annual return. Retrieved from https://www.ato.gov.au/Super/Self-managed-super-funds/In-detail/Forms/SMSF-annual-return-form-and-instructions/
  3. Superannuation Industry (Supervision) Act 1993. Retrieved from https://www.legislation.gov.au/Details/C2019C00158
  4. Australian Securities and Investments Commission. (2021). SMSF trustee responsibilities. Retrieved from https://www.asic.gov.au/regulatory-resources/superannuation-and-retirement/self-managed-super-funds/smsf-trustee-responsibilities/

Disclaimer: This information should not be considered personal financial advice as it is intended to provide general advice only. This factsheet has been prepared by SMSF Audit Australia Pty Ltd without taking into account your personal objectives, financial situations or needs.