Do you have a Self-managed Super Fund? Are you considering setting up a Self-managed Super Fund? It’s important you understand what’s involved, particularly when it comes to audits. Read below for more.
Self-managed Super Funds have been rapidly growing in popularity over recent years.
They are an ideal investment venture for people seeking to take direct control of their finances and retirement savings.
As is the case with any other investment opportunity, SMSFs have upsides and downsides to them.
Among them is the strict legal guidelines that underlie the investment.
Also important alongside the legal work is the audit of the fund that is undertaken yearly as a regulatory requirement.
The examination has no way around it, and you have to get it right.
How Often Are SMSF Audits Undertaken?
SMSF audits are undertaken annually by the fund’s appointed auditor. This is the proper checking for the financial and compliance state of the SMSF.
Certain policies, however, allow for alternative options. These options include, for instance, auditing the SMSF after every three years.
Even though such a policy would seem favourable, this article doesn’t recommend.
This is because letting the SMSF run three financial years before auditing it only adds to the complexity of the process.
Equally, the cost of such an audit would potentially be much higher as a result.
What Documents Are Required For The Audit?
For the audit of a Self-managed Super Fund to be conducted, the trustees/members of the fund are required to provide to the auditor certain documents.
This includes documents containing information relevant to the fund and its business.
They may consist of the fund’s account and that year’s financial exchanges documentation.
Bank statements and financial statements for that period fall into this category.
The auditor might also require more documents if not earlier submitted to him/her. If this is the case, it is to be done in writing.
The trustees of the Self-managed Super Fund are by law required to oblige and provide the needed information within 14 days.
What Is Involved In The Audit?
After appointing an auditor, and the trustees of the Self-managed Super Fund hand in the required documents and information relevant to the fund, the process of auditing the fund then begins.
Generally, the audit can be broken down into two parts:
The conduct of this audit scrutinises the Self-managed Super Fund’s financial statements.
This includes the balance sheet, the member statement and also the income statement
The purpose of the compliance audit is to scrutinise whether indeed the Self-managed Super Fund complies with all the regulations and legislation surrounding the conduct of superannuation.
It analyses whether the fund meets the definition of an SMSF as legally denoted and adheres to benefit and contribution set bars.
What Follows The Audit?
After the audit is conducted, the auditor is obliged by law to issue the members, also known as trustees of the SMSF with a management letter that highlights the audit report, findings and ramifications thereof.
Such details could include any illegalities in compliance, suggestions for a way forward for the SMSF or even any loopholes in the fund that need corrective measures.
Further, the auditor is required to report to the superannuation regulatory body should the finances of the SMSF be questionable or should there be a breach in compliance.
All self-managed super funds are legally obliged to be audited at least yearly or otherwise, depending on the fund’s policy.
This is encouraged and is done to make sure that the existence of the superannuation and the conduct of its business is in line with the regulations set.
Such compliance is imperative, and a breach thereof has been known to attract penalties with the severity depending on the extent of the violation of the agreement.
If you are looking to establish a Self Managed Super Fund, or need to have your Self Managed Super Fund audited, then look no further than SMSF Pro.
SMSF Pro has years of expertise in the Self Managed Super Fund arena and is able to conduct quick and independent SMSF audits for a flat fee.
Please call us today on 1300 023 374 or message us here for all your Self Managed Super Fund requirements.