A self-managed super fund (SMSF) trustee is obliged to designate an SMSF auditor approved by the Australian Taxation Office (ATO) on or before forty days before filing their SMSF annual return. In a nutshell, an SMSF auditor is a financial expert who works to evaluate if your company’s finances comply with the superannuation law.
Besides that, they also monitor your fund’s financial statements. If you’re thinking of hiring an SMSF auditor, then you must get someone that requires only minimal supervision so that you can focus on reaping the benefits of your trust while they handle your financial records. Aside from that, a major rule about hiring SMSF auditors is that they aren’t allowed by law to audit a fund that they have a financial interest in, nor have an intimate or professional relationship with the SMSF members or trustees involved.
Keep reading below to find out more about hiring an SMSF auditor.
The Importance of Having an SMSF Auditor
Before you seek the assistance of an SMSF auditor, the person you select must be registered with the Australian Securities & Investments Commission. They should also have an SMSF auditor number which you will have to provide each time you submit your company’s annual return.
An SMSF auditor is knowledgeable at advising those in need regarding current assets in your SMSF and if your fund adheres to the rules and regulations listed down in the Superannuation Industry (Supervision) Act of 1993. Before they establish an audit of your fund, an SMSF auditor will create a Terms of Engagement Letter and submit it to the trustee of the fund.
What is a Terms of Engagement Letter?
The letter involves the duties and obligations of all parties linked to the audit, including the range of the audit. As a result, your existing accountant serves as an SMSF auditor’s primary contact person and will be provided with a separate Terms of Engagement Letter.
With the letter stating each party’s capabilities, it will serve as protection for you, your accountant, and the auditor to prevent any miscommunication from occurring. The Terms of Engagement Letter also stands to secure audit evidence prepared by your auditor in case of unwanted tampering and mishandling.
SMSF auditors who don’t follow legal standards can be sued and face charges given by the Court. Besides that, the letter can also be considered a contract so that both parties remain accountable in the event of compliance breaches, such as reaching out to other auditors for second opinions. As a result, trustees may be audited by the ATO once they violate the policies stated in the Terms of Engagement Letter.
When is an SMSF Auditor Held Liable?
An SMSF auditor is usually tasked to give an honest and reliable opinion regarding your assets, proving that your fund exists and is being assessed as part of the requirement by the SIS Act. If you also require the guidance of an accounting firm, they will work hand-in-hand so that the auditor can confirm that your superannuation funds are appropriately handled and comply with all given conditions.
In the event that the SMSF auditor you hire does not stick to the given standards and, instead, prefers to take the situation into their own hands, they end up putting themselves at risk to potential lawsuits. Aside from that, they are also causing trouble with your company and your small business accounting service.
If you’re worried about relying on an SMSF auditor, it’s important to remember that they are tied by the law to accomplish their auditing responsibilities as professionally and lawfully as expected. A Terms of Engagement Letter exists to impose the rules and regulations for all parties present. So the secret to having an SMSF auditor is to take a closer look at how the audit is done and that everyone involved should make an effort to achieve their duties accordingly!
Are you looking for auditing and accounting services in Australia to handle your SMSF trust? SMB Accounting offers individual tax returns, small business accounting, SMSF audits, and Xero accounting software to our clients in need. Get in touch with us today to book an appointment!