If you manage your own Self-Managed Super Fund (SMSF), you may have heard of an SMSF auditor, but what exactly do they do? An SMSF auditor is responsible for ensuring that every SMSF meets the legal requirements and operates within the Australian Taxation Office’s guidelines. Here’s a guide to understanding the role of an SMSF auditor and why it’s important.

When and How Often Should I Have My SMSF Audited?

An audit is an important part of ensuring that your SMSF meets the regulatory requirements set by the ATO. Your SMSF must be audited annually and whenever there is a change in: its investments, trust deed, members, roles (including trustees and responsible officers). Furthermore, an auditor can provide valuable insights into your accounts when considering changes to allow cashing out or liquidity in your SMSF. Having your SMSF audited regularly ensures that it’s operating correctly and you’re complying with the tax regulations.

An SMSF auditor is a professional who is responsible for ensuring that the SMSF is operating within the laws and regulations set out by the ATO. They are responsible for reviewing the financial statements and records of the SMSF, and for providing an independent opinion on whether the financial statements are accurate and comply with the relevant laws and regulations.

SMSF auditors must be registered with the Australian Securities and Investments Commission (ASIC). To be registered, they must meet certain qualifications and experience requirements, and must also pass a professional conduct exam. The ATO also maintains a register of SMSF auditors, which can be used to check if an auditor is registered and qualified.

The role of the SMSF auditor is to ensure that the SMSF is operating within the laws and regulations set out by the ATO. This includes checking that the SMSF is complying with the Superannuation Industry (Supervision) Act 1993 and the SMSF regulations. The auditor will also review the financial statements of the SMSF, including the income statement, balance sheet, and cash flow statement. They will also check that the SMSF has sufficient assets to pay for its liabilities and that the SMSF is not in a position where it is unable to pay its debts as and when they fall due.

The auditor will also check that the SMSF is maintaining accurate records and that it is keeping track of all transactions. They will also check that the SMSF is making the correct contributions and that it is paying the correct taxes. The SMSF auditor will also check that the SMSF is not engaging in any prohibited transactions, such as lending money to a member or a member’s associate.

The SMSF auditor will also check that the SMSF is not in breach of any of the investment restrictions set out by the ATO. This includes checking that the SMSF is not investing more than 5% of its assets in a single entity, and that it is not investing in assets that are not allowed, such as collectibles or artwork.

The SMSF auditor will also check that the SMSF is not in breach of the sole purpose test. This test requires that the SMSF is maintained solely for the purpose of providing retirement benefits for its members. The SMSF auditor will check that the SMSF is not being used for any non-superannuation purposes.

Once the SMSF auditor has completed their review, they will provide an independent opinion on the financial statements of the SMSF. This opinion will include a statement that the financial statements are true and fair, and that the SMSF is operating within the laws and regulations set out by the ATO. If the SMSF auditor finds any issues or non-compliance, they will provide recommendations on how to rectify the situation.

The SMSF auditor’s report is an important document that must be provided to the ATO as part of the SMSF’s annual return. The ATO will use this report to check that the SMSF is complying with the laws and regulations, and that it is operating in the best interests of its members.

In summary, SMSF auditors are responsible for ensuring that SMSFs are operating within the laws and regulations set out by the ATO. They review the financial statements and records of the SMSF and provide an independent opinion on whether the financial statements are accurate and comply with the relevant laws and regulations. SMSF auditors

Disclaimer: SMSF Audit Australia Pty Ltd is not licensed to provide advice on investments, or legalities of the types of investments that you can have. We recommend that you seek professional advice from an AFSL holder before making any investment choice or decision including establishment of a SMSF. The articles on this website is for educational purposes only.