[vc_row][vc_column][vc_column_text]Many of our clients have a Self Managed Superannuation Fund (SMSF) and would be aware of the annual audit requirement for your super fund. The compulsory annual audit includes review of the super funds compliance with the SIS Act and a review of the financial statements to verify the reported assets and liabilities are materially correct. The income tax return cannot be lodged until the audit is completed.

The auditor must be independent from both the super fund and the accountant/administrator who prepares the financial statements. In the past it has been common and accepted practice for accountants to have conducted both the accounting and audit services within the same firm, ensuring separate services lines or partners are responsible for each function. In 2020 there was an update to APES 110 Code of Ethics for Professional Accountants and subsequent Australian Taxation Office updated guidance in relation to SMSF audits.

The ATO guidance and updated Code of Ethics makes it clear that the same service provider can no longer perform the audit and prepare the financial statements (notwithstanding separation of the roles or services). The ATO guidance has allowed accountants until 1 July 2021 to transition the outsource of their SMSF audits.

What does this mean for you, as a SMSF member and trustee?
Where Trove Group has been responsible for both the accounting and audit functions we will ensure that your audit is transferred to a competent and qualified SMSF auditor and as your advisers we will act as the conduit between you and the auditor. Trove Group will facilitate the audit process and assist the trustee respond to any auditor queries to ensure the process is seamless for you, the trustees.

What is the expected audit focus for FY2021?
Due to the unusual events of 2020/2021 it is likely auditors will focus on key area’s of the funds operations such as:[/vc_column_text][vc_column_text]

• Appropriate release authorities and documentation for COVID-19 early release;
• Property and rent relief documentation to ensure the trustees have been acting on arm’s length terms;
• Investment strategies – ensure that these are reviewed and considered in light of the significant events of 2020/21;
• Market valuation requirements – The SIS Regulations require that all assets are reported at their market value. This puts the onus on the fund trustees to provide sufficient and appropriate audit evidence of the market value of all investments.
  • Unlisted investments – The very nature of these types of investments can make this difficult in some instances and the auditor may need to qualify the audit report if the trustee is unable to provide appropriate audit evidence of market value. Trustees should consider the market value requirements when making investment decisions.
  • Changes in market value due to COVID-19 related matters – Trustees need to consider whether the events of 2020/21 may have significantly impacted the market value of assets such as property (whether commercial or residential) and therefore the need to obtain an appraisal or market valuation by a third party (ie: real estate agent or licenced valuer). As noted above, it is the trustee’s responsibility to provide evidence of current market value and if events during 2020/21 have impacted the value since last appraisal then we suggest you obtain un updated valuation to determine current market value.

[/vc_column_text][vc_column_text]Should you have any queries in relation to matters addressed above please do not hesitate to contact your Trove advisor to discuss. [/vc_column_text][/vc_column][/vc_row]