Steps to Preparing for Audit of Your SMSF

May 30, 2017 — by Valeriya Vimon

It’s part of human nature to save for rainy days, even though there are also those of us who enjoy the thrill of going on shopping sprees more often than not. When one understands finances generally, one is more prone to saving for future days, and that includes days beyond retirement. Nowadays, the future doesn’t seem like something to be feared, not when you have the choice of using funds to gather up money for your days as a pensioner.

Australia is known for the SMSF, and investments and borrowings are still on the rise which shows just how much they become part of people’s lives. Whether you already have your own superannuation fund, or are thinking of taking this financial step, you have to remember there is a set of rules you have to comply with to manage your fund according to the ATO requirements. One of those rules is having your fund and all the related accounts and investment documents audited per year by a professional auditor, even if you prepare your own accounts and tax return, acting as the accountant.

investment strategy

The person carrying out the audit mustn’t be related to the trustees and has to have the experience and knowledge. If you want to be able to carry this out properly and not breach any rule, ending up with a fine to pay, there’s an SMSF audit checklist you have to complete. The first step of course is to hire an auditor. If you want to make sure it’s a reliable professional, you can check to see if a particular auditor is listed as certified among the registered ASIC (Australian Securities and Investments Commission) auditors. As soon as you’ve found your auditor, you’d be required to provide information about your transactions from the previous year.

A typical audit process covers up an Smsf audit checklist, and is divided in two segments, one that’s the part of financial report audit, the other compliance report audit. The financial report audit comprises of several necessary documents that you’d have to provide the auditor with, starting from the audit engagement letter trustees have to sign, as well as the trustee representation letter, then complete annual tax return, balance sheet, and income and member statements, whereas for the compliance report you’d need copies of all the permanent SMSF files (signed trust deed, investment strategy, minutes of meetings, consent to act as Trustee and Member applications).

The purpose of the audit is to give you a notion as to whether there’s something in your fund’s strategy that needs to be changed, so it’s at your benefit. One thing you can learn from managing your SMSF is you have to be organised so consider that another step you must take care of. Best way to prepare for your audit is to collect all your documentation prior to the meeting with the auditor, from documents on investment and bonds, to receipts from insurance payouts, records of rent and loans.

You never know when the auditor might want to look into certain matters more thoroughly. You can’t hide anything from your auditor, as it’s against the law, so make sure you show them everything. If by any chance you’ve breached a rule, the auditor is obliged to submit the findings to the ASIC and ATO. As long as you act accordingly to the rules, you can be sure your SMSF would work in your interest.