As the SMSF sector continues to grow, so does the function and responsibility, of an audit. Audit costs are holding for now, to support our auditor community to deliver their service we are looking to make their task easier and keep costs stable.
All SMSFs must be audited every year, before the Annual Return is lodged. Auditors must have sufficient documentation to support their findings, opinions and professional judgment. Audits can be complex, time-consuming and costly. The following steps may help to ease the audit process.
One important responsibility trustees have is to ensure all supporting documentation the auditor may need is made available to them. We find this is the query most often raised by auditors and the documentation requested is usually very basic, such as property expense invoices or annual portfolio reports. We find this is also one of the mor challenging aspects for trustees – having to accumulate and manage documentation for their SMSF over a 12 month period. Unfortunately, there is no shortcut keeping these records. Clients who review their SMSF regularly, can provide documentation to their SMSF professional on an ongoing basis to store it for them. They should also be able to update the SMSF, providing accurate and up-to-date accounts.
Another query often raised by auditors is where ethe investment strategy doesn’t meet the statutory requirements. The superannuation laws require an investment strategy that is consistent with the member(s) investment objectives and retirement goals. The strategy must address the following factors regarding the whole circumstances of your fund:
Formulating an investment strategy can be a complex and challenging task for trustees. It is often recommended trustees seek professional advice when preparing an investment strategy however, for those trustees who would like to prepare the strategy themselves, they can use our online DIY Investment Strategy Preparer Tool.
Ensuring assets are valued at their market value at 30 June each year can be difficult for unlisted or illiquid assets. Where assets are listed or widely held, it’s often very easy to obtain the year-end market valuaton. However, for unlisted assets, this can be difficult and it’s likely the auditor will request supporting documentation, to confirm the asset is held at the current market value.
For properties, these are often easily obtained through online services, such as our Desktop Residential Property Valuation. Generally, these are obtained every three years however, if there have been significant market changes, the auditor may request a new valuation or supporting documentation, to verify why the trustee believes the current valuation is still accurate.
Keep up to date with all the latest SMSF news and updates by subscribing to SMSF Engine’s newsletter.