So, you have set up your SMSF. Good for you, but do you know which are your responsibilities? One of your key responsibilities as a self-managed super fund trustee is to make sure you have your fund and all relevant accounts audited on a regular basis (each year). This is not some invented rule, it is a requirement by the Australian Government and the Australian Tax Office (ATO). In case, you decide not to perform a regular audit of SMSF be sure that there will be significant penalties.
Unfortunately, audits can be tricky, that is why we have put together this guide that will help you understand everything related to the auditing process.
Hiring An Auditor
Hiring an auditor each year can be a bit of a hassle since you need to choose a licensed one and someone you could trust. So, being careful is one of the first things you need to undertake if you want to find a trustworthy and reputable auditor.
The Australian Securities and Investment Commission (ASIC) has the power to choose who to register as an licensed SMSF auditor, so it is best to use their official search function in order to find someone who will do the audit of SMSF. This is the only way to find an auditor that will do his/her job professionally.
Using banned or disqualified auditor will make you face penalties.
Preparing Your Documents
Organisation is key, and the best way to prepare for your audit is to ensure you keep all your documents, records and receipts in check throughout the year.
Make sure you have everything prepared prior the meeting with your auditor including:
- Documents on investments and bonds
- Receipts from insurance payouts
- Mortgages paid
- Records of rent received
Trying to hide something from your auditor is against the law, so make sure you show him/her everything as hiding something will only get you in trouble.
Reporting The Findings
Once the audit of your SMSF has been completed, the auditor has the obligation to report the findings to you and the other members and trustees, but this doesn’t mean that you need to submit it immediately to the ATO. In fact, the findings from the report will help inform your annual return.
In case the auditor believes that you have broken the law or that there is something wrong with the fund, they will submit the findings to the ASIC and ATO immediately for investigation.
The proper audit will help you understand whether you are in a position to profit or you will need to make some changes to your strategies. The last important thing you need to know is that all trustees have a copy of the auditor’s report, and you should also provide your accountant or financial adviser with a copy as well.