A lack of knowledge on superannuation laws is one of the biggest issues the tax office has found when reviewing the performance of self-managed superannuation fund (SMSF) auditors.
This was one of eight issues the Australian Tax Office found that also included auditor independence, insufficient documentation, and insufficient evaluation of evidence obtained to show the auditor appropriately formed an opinion on the fund’s compliance with the relevant super laws.
It noted that it would refer an SMSF auditor to the corporate watchdog if they had failed to perform their duties under the Superannuation Industry (Supervision) Act 1993 (SISA), had breached a provision of the SISA or Superannuation Industry (Supervision Regulations 1994 (SISR), or was not “fit and proper” to be an approved SMSF auditor.
One of the common areas where auditors failed to obtain sufficient evident to support their opinion were:
- Market valuations for unlisted assets;
- Documents supporting a limited recourse borrowing arrangement (LRBA), including obtaining the loan agreement or bare trust deed; and
- Valuation evidence for collectibles including insurance.
Unsigned documentation was also an issue including for trustee representation letters, engagement letters, management letters, and financial statements in particular.
The ATO also noted other issues were:
- Failure to bring immaterial breaches to the trustee's attention in a management letter such as breaches relating to separation of assets; and
- Failure to report contraventions to us – you must report all contraventions that meet the reporting criteria, even if they have been rectified during the year.