SMSFs to move to three-year audit cycle

An announcement from the 2018 Federal Budget states that the government intends to change the SIS regulations which require an SMSF to be audited by an approved auditor every year. 

Currently, the trustee of a superannuation entity must ensure that an approved auditor is appointed to give the trustee a report in the approved form of the operations of the entity for that year.

In addition, the trustee of a superannuation entity must provide the auditor with any document (as may be requested in writing by the auditor) that is relevant to the preparation of the report within 14 days of the request being made.

The approved form of audit report must cover various areas of superannuation law, such as the fund's compliance with areas of the SIS Act 1993. Also, a financial audit must be completed and the auditor must be satisfied that the financials represent a true and fair view of the position of the fund for the year in question.

Proposed changes

The proposed change is that a self-managed superannuation fund may be eligible to get an audit report once every three years should they meet certain criteria.

The first criteria is that they have had three consecutive income years with an unqualified audit report.

The second criteria is that the SMSF must have lodged its annual returns on time in those same three consecutive years.

Risk mitigation steps

There appears to be no change in policy surrounding the stringent record-keeping obligations of SMSF trustees imposed under the SIS Act 1993. This includes:

·         keeping accurate and accessible accounting records that explain the transactions and financial position of the fund for a minimum of five years

·         preparing an annual operating statement and an annual statement of the financial position of the fund, and keep those records of a minimum of five years

·         keeping minutes of trustee meetings and decisions, including changes to trustees for a minimum of 10 years, and

·         keeping copies of all annual returns lodged and reports given to members for a minimum of 10 years.

Also, there is a strict penalties that apply to non-lodgement of various superannuation fund reports that are not part of this announcement. That includes events-based reporting, lodgement of annual return and reporting of contributions received to the regulator.

Information sourced using CCH iknow