The SMSF Auditor’s Edge: Staying Sharp in a Shifting Super Landscape – 5 program recorded serie

Program 1: Super Shifts: What’s Changed and What Auditors Need to Know

With the superannuation goalposts continually changing, the SMSF auditor needs to keep abreast of any such changes to ensure their annual audits are undertaken with an up-to-date knowledge base. This session is designed to assist, reviewing recent changes, as well as a jot of the memory for some previous ones, including:

• Update on the various changes to caps and thresholds
• Update on the downsizer contribution rules and tips on the audit processes to follow
• The current non-arm's length expense rules and impact they have on the audit
• How the work test applies to contributions and auditing eligibility
• A SuperStream refresher and issues with the current take up in practice
• State of play with Division 296 (the proposed $3 million super cap)
• Case review update involving SMSF auditors (incl. Islam v ASIC [2024] ARTA 88 (18 December 2024); Murphy v ASIC [2025] ARTA 75 (6 February 2025))
• Further updates that an SMSF auditor needs to be aware of

Program 2: Don't Forget the Part A Financial Audit

The annual SMSF audit consists of two parts. Part A, being the financial audit, and part B, being the compliance audit with the superannuation laws. This session focuses on Part A and how this part of the audit needs to be conducted to comply with the Australian Auditing Standards and the expectation of the ATO, including:

• How Part A of the SMSF audit should be conducted
• Potential consequences of misclassifying investments in the financial statements, including:
  • fixed term accounts classified as “cash on deposit” where ownership structure is by way of units in a unit trust
  • when cash amounts in financial statements are in fact loans (Cam & Bear Pty Ltd vs McGoldrick [2018] NSWCA 110)
• Auditing the extent that amounts classified as loans from the SMSF are recoverable
• Practical examples as to what extent an auditor may need to check a fund's tax expense account, including:
  • CGT cost base evidence
  • NALI/NALE implications 
• What extra checks are required for the financial audit when an SMSF is being wound up?
• Practical examples of the Part A audit that may result in:
  • a qualified opinion
  • an adverse opinion
  • a disclaimer of opinion  
• Examples of audit report completion based on various scenarios of findings under Part A

Program 3: Wrap Accounts and SMSF Audits: Verifying Investments and Managing Risks

How reliant can SMSF auditors be on the reports provided by service organisations managing the investments of an SMSF? This session delves into the topic, including:

• The extent of reliance an SMSF auditor can place on:
  • type 1 and type 2 reports
  • audited and unaudited portfolio transactions and valuation reports from an investment manager
  • a special purpose audit report by a services auditor
• Suggested audit procedures to follow based on the extent of audited documentation received from an investment manager
• Expectations of extent of audit procedures and evidence required verifying ownership of SMSF investments held in the name of a custodian
• Migrating wrap accounts to a new platform:
  • What audit procedures may be expected?
  • Does the migration trigger a CGT event? 
• Examples of reports provided by custodians
• Practical examples of the type of audit report that may be issued, depending on the audit evidence provided by an investment manager

Program 4: Auditor Contravention Reports: Key Triggers and Compliance Risks 

Not all contraventions of the SISA or SISR require the lodging of an auditor contravention report (ACR). The auditor must first determine whether the contravention has met the reporting criteria. This session looks into the threshold, including:

• The tests to use to determine if an ACR is required
• Auditor obligations for identified contraventions if the audit engagement is terminated before the finalising of the audit
• Dealing with contraventions from earlier years prior to auditor engagement, which remain a contravention for the current year being audited
• Auditor obligations for reporting under section G of the ACR
• Action to take if a contravention is identified that doesn't meet the criteria to lodge an ACR
• Consequences for not lodging an ACR when required
• The implications of ‘auditor shopping’
• Practical examples

Program 5: Auditing SMSF Borrowings: Rules, Risks and Auditor Responsibilities

There are only limited circumstances where an SMSF can borrow funds. This session looks at what those circumstances are and the auditor obligations attached to them, including:

• SMSFs and short-term borrowings
• Using the “safe harbour” terms to minimise the risk of NALI applying to an LRBA (PCG 2016/5) for:
  • property
  • listed shares or units
• Audit issues that arise in practice when a fund has an LRBA in place
• ATO views on using LRBAs to maintain, repair or improve a property (SMSFR 2012/1)
• What if other entities borrow funds that an SMSF is involved in? i.e.:
  • A unit trust borrowing funds that an SMSF owns units in
  • Tenant in common owners borrowing to acquire their share of a property partly owned by an SMSF
• Audit obligations when audit evidence lacking
• Practical examples