SMSF audits and admin
6 SMSF practices to look out for
If you are running your self-managed super fund, you are a trustee so you need to abide by Australia’s self-managed super fund regulations. Trustees must not:
- Use funds to provide loans or financial assistance to members
- Mix personal and SMSF assets
- Use the fund to pay off personal debts
- Use the fund to buy assets from related parties
- Pay money to a fund member who is not retired
- Invest in assets that can benefit members before they retire (except in very special circumstances)
And similarly, as a trustee you must:
- Keep investments at arms length
- Keep full and proper documentation of all transactions using SMSF funds or assets
- Make decisions that benefit all members of the SMSF
A major requirement in the management of an SMSF, is that it is professionally audited every year.
Under the Australian Taxation Office’s self-managed super fund regulations, this must be done by an approved auditor who undertakes full financial and compliance audit of your super fund. As trustee of the fund, you must provide the auditor with:
- Your fund’s financial statements
- All documents and information legally required by the auditor to make an accurate review and assessment of your fund’s transactions
A compliance audit involves assessing the administration of your SMSF to ensure compliance with the superannuation rules. The financial audit looks at how and where you have invested your super funds, to ensure there are no illegal or fraudulent transactions.
What can I expect from my approved auditor?
Before starting the fund audit, the auditor will ask for a letter of representation from you. This letter is a statement from the trustees that the SMSF trustees believe that the financial statements are a fair representation, and that the super fund complies with the superannuation laws. This is a legally binding document.
To meet the requirements of the ATO’s rules for self managed super funds, your auditor must:
- Provide you with an audit report before the due date for lodgement of your SMSF’s annual return
- Alert the ATO’s and the fund trustees, about any concerns the auditor has regarding:
- Your fund’s financial position
- Your fund’s compliance with the super law
- Report to the ATO certain contraventions of the super law that they may identify during an audit.
You can also expect an audit finalisation report from your approved auditor.