Yes, this is a question for firms undertaking the administration of superannuation funds. It should also be a question asked by Fund Trustees. Agreed, sometimes the price is no indicator of whether or not the audit is done “properly”.
Here are some of the matters I consider the auditor should request and review.
1. The permanent file for the Fund.
2. That documents such as Trust Deeds should be signed and dated
3. They should review the Trust Deed date and ensure that it is current. The activities of the Fund should be in-line with the Fund’s governing rules.
4. They should check all pensions are documented and those documents signed
5. That a separate bank account is maintained, with funds in it
6. That the Fund finance any Financial Institution Confirmation Requests needed and request the Confirmation responses so as to be sure the balances are there
7. That the Fund should finance any Title Searches required for Real Estate.
8. That any possible personal assets such as paintings, coins, carpets, etc are properly secured and insured and are not used for private purposes
9. If insurance is needed for any assets of the fund, or for a member, then this is held
10. That the financial statements agree with the trial balance
11. That the Fund has an appropriate Investment Strategy. From 1 July 2012, the trustee(s) must consider what “insurance(s)” are appropriate for each member.
Be ready for clients querying the cost of the audit. They may explain they feel you have prepared the financial statements and tax return, so all should be OK. It can be useful to remind them the audit is a legislative requirement and must be done by a Registered SMSF Auditor. From 1 July 2014 – a new penalty regime will take effect. The most common penalties for breaches will carry penalty units that range from 5 units to 60 units, equal to a dollar value of $850 to $10,200. These penalties will apply to each trustee (where there are individual trustees). The penalties will only apply once where there is a corporate trustee.
Written by David Saul of Saul SMSF. For more information on this article or Saul SMSF please visit www.saulsmsf.com.au
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