What Is SMSF Auditor Contravention?

A self-managed super fund requires approved auditors for proper tax reporting. As an SMSF member, you need to employ an SMSF auditor who applies contraventions properly or penalties could be imposed or the fund could lose its status. Here are some basics to help with understanding what is SMSF auditor contravention, so you are sure you have hired an auditor qualified to report your fund properly in the event a contravention or contraventions happen to the asset holders.

Actions, which are contraventions to a SMSF, are known as “events” for tax reporting purposes. Events can result from something a trustee does to other matters that arise. Your auditor must report all contraventions that result from an action by the fund’s trustee or trustees.

Auditors must apply specific reporting criteria to work out contraventions as per SISA and SISR and indicate them on tax forms. When preparing a report, each event must be described. Then, the auditor must choose one of the relevant SISA and SISR sections on the report to indicate what kind of contravention the event was. All contraventions must meet reporting criteria.

Your auditor will not have to alter his or her audit methods for reporting as long as they meet Australian auditing and assurance rules and standards. What you can expect for the reporting is your auditor will apply several different tests to see which of the contraventions must be reported.

Your auditor will go through each test and indicate on the report if the fund meets the requirements set within. For example, the basic test, Test One, will ask your auditor to ensure the fund itself actually meets the definition of SMSF. Once it does, it then makes sense for your auditor to work through the rest of the tests to complete the proper reporting. Your auditor should understand that all reporting is done from the date the SMSF first holds assets for event reporting.

If the auditor were to apply the criteria incorrectly, your fun may actually lose its status. The tax authority can help your auditor avoid this from happening, so it is important for him or her to reach out to the tax office for help if the reporting of events becomes confusing. Knowing what is SMSF auditor contravention and how to report it through him or her is essential to keeping the fund and its assets growing.