SMSF Auditor Contravention Report Instructions

Auditing is an essential part of running an SMSF. This is probably due to the large sums of money that are controlled by these self-managed super funds. The total finances held by any SMSF will comprise the money in the funds savings account as well as the money that has been invested elsewhere.

The fact of the matter is that currently, self-managed super funds control about $550 billion worth of cash and assets. Going by the fact that this is the money of a million or so Australians who have invested their money in superannuates, it is very important that the management of this funds be subjected to an annual audit.

When it comes to SMSFs, auditing becomes a bit interesting. You probably don’t know this because the matter might seem complex to the untrained eye. This article intends to address that by providing the reader with the most frequently asked questions about SMSF auditor contravention report instructions.

An audit report should ideally be independently conducted by a professional auditor to ensure that it contains no bias. The auditor should also identify any violations that might have been committed by the trustees or the person managing the SMSF and duly included in the report.

To better understand and appreciate SMSF auditor contravention report instructions, let’s take a look at some of the questions that have been raised concerning the conduct of an effective SMSF audit.

How Is The Independence Of An Auditor Determined?
This is one area that seems to confuse many people including the auditors themselves. The whole idea of auditing is to obtain financial statistics of the SMSF that are reliable. For the results to be reliable, the audit should be performed by an independent auditor. So, how do you know that you are an independent auditor?

All auditors should apply the conceptual framework approach that is provided by the code of ethics for professional accountants. The approach requires that auditors address any challenges that they may encounter while conducting an audit with great professionalism.

Any threats to their independence should be identified and properly evaluated before implementing a suitable safeguard to minimize the threat.

Can The SMSF’s Tax Agent Couple As The Auditor?
This is yet another gray area that presents its own set of challenges. First of all, it is quite possible or the tax agent of the self-managed super fund to act as the auditor. But in doing so, the auditor will have to exercise great professionalism in the determination of whether or not they have contravened their code of conduct.

By taking up the two roles, two scenarios come up; a “self-review” where during the audit you will discover that you are basically reviewing your own work and as such errors contained in the tax return report will be present in your audit report. The other undesirable situation that crops up is referred to as advocacy and in it you will find that each audit decision you make is subject to a threat.

To maintain the integrity of the audit report, it would be better to have a different person conduct the audit.

Can The Person Preparing The Accounts Conduct The Audit?
Well, this will present challenges of “self-review” like the one discussed above. It will be very difficult for the person who prepared the books of accounts to conduct the audit. Actually, you will not be achieving anything unless the individual conducting the audit approaches all threats with great professionalism and does not go beyond the boundaries of the code of conduct.

What Level Of Documentation Is Required When Auditing An SMSF?
While preparing the audit report, you should do it according to the auditing standards outlined in ASA 230 Audit Documentation. Reference should also be made to the Small Entities Audit Manual (SEAM) by auditors to ensure that whatever they include in the documentation is appropriate.

Where Can SMSF Audit Guidelines Be Obtained?
There are quite a number of sources that can be used by SMSF auditors to ensure that the audit is done right. These include:
o    GS 009 Auditing Self-Managed Superannuation Funds

o    APES 110 Code of Ethics for Professional Accountants

o    The ATO website

o    Small Entities Audit Manual, and

o    The independence guide

What Should Be Done In The Case That A Contravention Has Been Discovered?
Any contraventions that are discovered while conducting the audit should be reported immediately to the ATO. Trustees may unknowingly violate the SIS legislation and regulations. The auditor should use the framework provided by the auditor contravention report (ACR) to file all contraventions discovered following the instructions laid out by the ATO.

In conclusion, the above are the questions that have been raised concerning the SMSF auditor contravention report instructions. It is my firm belief that the article was quite resourceful in providing insight into the matter.