A self-managed superannuation fund (SMSF) is established as a trust structure. The fund's sole purpose is to manage retirement funds on behalf of its members, the benefits of which can also be passed to a member's beneficiaries upon death. All SMSFs require an annual audit and only auditors who are Australian residents and who have registered with the Australian Securities and Investment Commission (ASIC) can be approved.
Once registered, there are other requirements that must be met before they are eligible to be placed on the list of sanctioned SMSF auditors. The list includes requirements such as having 300 hours of SMSF practical audit experience in the three years prior to registration, and holding a relevant tertiary qualification that either includes an audit component or, if it does not, includes a completed study in audit as part of a professional accounting body programme. It is also necessary to pass a competency examination.
Requirements to qualify as an SMSF auditor
Further requirements to audit a SMSF were introduced in July 2008 and are considered alongside the registration with the ASIC. These include that the prospective auditor must have completed a course in the audit of SMSFs that complies with the laid down regulations before beginning to audit SMSFs, should demonstrate professional standards, should hold a practising certificate (such as a CA), should have appropriate Professional Indemnity Cover, and should be continuing with his/her Professional Development. It is also stipulated that the auditor ensure that all those who work with him/her as subordinates are knowledgeable and properly supervised. In addition, auditors are required to keep their details up-dated, as well as lodging an annual statement with the Australian Tax Office (ATO).
Auditors who qualify should comply with the normal laid down ethical requirements that would apply to any other audit – these can be found in the Code of Ethics for Professional Accounts. One stipulation is that they should demonstrate independence in all audits. The members of an SMSF are not able to audit their own fund as this would breach the requirement of independence.
ATO control of SMSF auditors
The ATO monitors all compliance by SMSF auditors. There is an electronic tool provided by the Office to assist auditors to complete the compliance element of an SMSF audit. The software also contains material that assists with passing the competency examination. Should the ATO determine that an auditor has been non-compliant, conditions may be imposed on the auditor's registration. In some circumstances, the auditor may be suspended as an approved SMSF auditor, or even have his/her registration cancelled.
There are many accounting firms, such as Boyd & Associates, that specialise in SMSF audits. By doing so, they are able to develop effective standard processes and can achieve economies of scale that would be difficult for a general accounting firm. They can also concentrate on one specialisation and keep completely up to date with any changes in legislation.