Importance of accuracy and timeliness of the audit report while submitting SMSF returns
What are SMSF audits?
Auditing the SMSFs involves reviewing and assessing the SMSF records for financial and compliance adherence, as required by regulatory bodies.
The key reason for auditing SMSFs is to ensure the fund complies with the ATO’s laws and the Superannuation Industry (Supervision) Act 1993.
Key elements of SMSF audits
- Financial Review
The auditor checks the accuracy of financial statements, transactions, cash flow statements, and member balances. At the end of this review, the true financial position of the fund is reflected.
• Regulatory adherence
This step checks whether the fund is compliant with the super laws and has followed all the rules regarding contributions, investments, and benefit payments. This also ensures the fund complies with all ATO rules.
• Transparency
Also, the fund’s investment strategy is reviewed to ensure investments align with the risk profile, diversification, and Members’/Trustees’ objectives.
• Proper Fund Management
Investment strategy review, contribution and benefit management, related party transactions, and documentation and record-keeping are monitored during SMSF audits.
What is the deadline for completing SMSF audits?
The lodgment deadline for filing the SMSF Annual Return (SAR) to the ATO, when done by a tax agent, is 15th May for the previous financial year.
While the SMSF audit itself doesn’t have a specific deadline, it must be completed before the SAR is lodged.
To facilitate smoother return lodging, firms should complete the audit a month or two before the deadline.
What happens if there are issues during the audit?
If there are any issues in the audit, the auditor flags them and, depending on their seriousness, takes action.
- Minor errors such as missing documents, mistakes in calculation or timing differences- Auditor raises a query, and the issue will be rectified
- Compliance breaches such as exceeding contribution caps, or an incomplete investment strategy. The auditor flags the issue and might include it in the management letter.
- Serious reportable contraventions, such as loan to members, early access to super, or repeated breaches- Auditor might report to ATO, and file the Audit Contravention Report – ACR.
How to avoid them?
Most of the issues arising when auditing SMSF can be resolved by following the blow steps below.
- Keep the SMSF records clean and updated
- Review the transactions consistently
- Be audit-ready, much ahead of the deadline, to rectify any issues generated during an audit.
- Always remember, audit reports are crucial while submitting returns, so be more cautious
From keeping records clean to staying compliant, preparing SMSF lodgments with accurate audit reports is essential to ensuring timely, error-free lodgments and choosing the right outsourcing support makes the process more efficient.
