It’s SMSF auditing.But not as you know it

An SMSF auditor is someone approved by and registered with the Australian Securities and Investments Commission (ASIC) to analyse, review and audit self-managed super funds.

You’re already in the right place – with our Evolv Grey and Evolv Black offerings, advisors and financial institutions get either full service or white label SMSF auditing capabilities. For general SMSF auditor searches, ASIC has a full database of SMSF auditors you can search.

As of April 2019, ASIC’s registers show just over 5,900 SMSF auditors in Australia. Across more than half a million self-managed super funds, that’s roughly a hundred funds per auditor if things were evenly balanced.

With such a high caseload, implementing the right technology can go a long way to improving both efficiency and quality. That’s the kind of change that Evolv Super’s suite of services can implement.

ASIC outlines strict requirements for becoming an SMSF auditor -. This includes having Australian residency, passing competency testing, and holding all relevant qualifications and practical experience.

There are also criminal and bankruptcy checks stretching back 10 years and with global reach, payment of fees and an online submission process through ASIC’s portal.

With so much value built into Australia’s self-managed super funds, it’s critical that only the best and brightest are approved to ensure their compliance and success. The registration system for SMSF auditing is rigorous, but it is the reason our audits are so successful.

To become an SMSF auditor, the initial rules to follow are outlined in ASIC’s Regulatory Guide 243, ‘Registration of self-managed superannuation fund auditors’.
On an ongoing basis, ASIC requires all SMSF auditors to remain compliant with APES 110 ‘Code of Ethics for Professional Accountants’, Class Order 12/1687 ‘Competency standards for approved SMSF auditors’, and the guidelines of the Auditing and Assurance Standards Board.

This is in addition to and auditing standards in their agreement with ASIC, and they must regularly keep all information up to date with the Australian Taxation Office (ATO). While ASIC keeps a register and updates relevant guidelines, the ATO takes the lead on SMSF auditor compliance. Some organisations, like CPA Australia, will also require a certain amount of professional indemnity insurance.

Should an auditor fail to meet standards, the ATO will refer them to ASIC for investigation and disciplinary action.

As per the ATO’s guidelines, there are several key steps involved in an SMSF audit – useful information for anyone looking to add this service to their business through Evolv Black.

• Trustees of a fund must appoint an auditor at least 45 days before their annual return is due.
• The trustees must also provide any and all information the auditor needs to conduct their work and respond to requests from the auditor for such information within 14 days.
• Auditors conduct both a financial and a compliance audit of the fund.
• Auditors return the NAT 11466 form, filled out and approved, to trustees within 28 days of receiving all relevant information.
• Trustees can file their annual return, containing the audit information.

A common issue in the SMSF sector, independence is the assurance that an auditor does not have any conflicts of interest with the audits they conduct. This is covered under APES 110 ‘Code of Ethics for Professional Accountants, and can have severe consequences.

Common examples that indicate a lack of an independent auditor are common financial interests or personal relationships between members of an SMSF and the person who audits it. There has also been conflict around whether financial advisors are independent enough to conduct an SMSF audit.

In most cases, a ‘better safe than sorry’ approach is ideal. That’s where services like Evolv Black can remove uncertainty, shifting full audit cycle liability to our team.

The Australian Securities and Investment Commission and the Australian Taxation Office are joint regulators of the SMSF industry, including all audit facilities. Key responsibilities of the ATO include:

• Reviewing SMSF auditors’ work in accordance with their duties.
• Checking SMSFs and their management in accordance with the law.
• Providing information for trustees and auditors to remain compliant.

They will not provide insight on investment strategies, rework the law or provide dispute resolution. Generally speaking, the ATO’s responsibility is enforcing existing legislation. ASIC undertakes legislative action against non-compliant auditors, and are a useful resource of information on changes to the industry or recent cases.

ASIC also enforces the Corporations Act 2001, which has some bearing on superannuation funds more generally.

Evolv White is one of many pieces of technology that helps auditors conduct audits in a more efficient fashion, but it is not the only one. SMSF audit software, generally speaking, is designed to facilitate faster, more compliant and value-adding SMSF audits. It automates key processes, eliminates significant elements of manual labour and minimises the risk of human error in an audit.