Understand the Importance of SMSF Audit for Successful Running of the Fund

The Australian tax office (ATO) has made SMSF Audit mandatory in Australia, as there has been a surge in such funds and an increase in frauds related to the same. The tax office states that the audit should be conducted by an auditor registered with the Australian Securities and Investment commissions' (ASIC), which would assure the government and the public that the funds are not used as expected. They can be trusted on this account.

The auditors should be independent of the fund that means they should not have any personal or business relationship with the fund members or trustees. They are not to take up the role of personal tax accountant of any of the trustees. The auditors would be responsible for analysing the fund's financial statements and assessing its compliance with retirement laws. If they find any issue with the handling of funds, they could bring it to the notice of the concerned authorities, including the tax office.

The country's supreme tax power states that the fund should be audited at least once a year. It is the responsibility of the trustees to appoint an independent auditor at least forty-five days before the fund's annual return to ATO is due. The audit is required even if there were no contributions to the fund or benefits paid during the financial year; in short, no transactions in the fund.

Professional auditors conduct financial and compliance audit as a part of the audit process. They go through all the financial statements like the balance sheet, income statement, member statements to check if they are according to the Australian Auditing Standards.

Once the auditors are done with the audition, they need to fill in an independent auditor's report provided by the ATO. The trustees should submit the report within twenty-eight days of the auditor receiving all the necessary documents. The trustees should work with their auditors to clear the discrepancies.