Superannuation Fund Audits

Amicas Group has a strong affiliation with an SMSF auditing firm who handles the necessary audits for the majority of our SMSF clients. The audit firm has the experience and qualifications required to conduct and issue such Independent Audit Reports. All correspondence can be made directly from us to the auditor to ease the compliance process.

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Annual Audit Requirements

In order to be considered a complying superannuation fund and receive tax concessions, it must first elect to be a regulated fund and governed by the rules of the Superannuation Industry (Supervision) Act 1993 (the SIS Act). A complying superannuation fund's income is taxed at a rate of 15%, while a non-complying fund's income is taxed at 47%.

The Tax Office regulates self managed superannuation funds. The Australian Prudential Regulation Authority (APRA) regulates all other superannuation funds that do not meet the definition of a self managed superannuation fund. See below definitions of a self managed superannuation fund.

The Tax Office and APRA monitor the compliance of superannuation funds under the SIS Act. They do this by requiring that the accounts and statements, and superannuation fund's compliance with the provisions of the Act, be audited each year by an approved auditor. The audit must be performed within 4 months of the end of the financial year.

Failure to perform the audits in accordance with the SIS Act may lead to significant penalties for the trustees and/or the auditor.


What is a self managed superannuation fund?

A superannuation fund is a self managed fund if:

•  It has a trust deed that meets the requirements of the SIS Act;
•  It has four or less members;
•  Each member of the fund is a trustee;
•  No member of the fund is an employee of another member of the fund, unless they are related; and
•  No trustee of the fund receives any remuneration for their services as a trustee.


What records must you keep?

Wherever possible, responsible accounting practices will be adopted by the trustees, such as:

•  Joint signatories to signing cheques
•  Separating of accounting functions, for example, receipts and payments
•  Segregation of duties 

Trustees must keep the following records for at least five years:

•  Accurate and accessible accounting records that explain the transactions and financial position of the fund
•  An annual operating statement and an annual statement of the funds financial position
•  Copies of annual returns lodged

Trustees must keep the following records for at least 10 years:

•  Minutes of all meetings
•  Records of changes of trustees
•  Records of changes of directors, if corporate trustees
•  Written consents by members to be appointed as trustees

For tax purposes, trustees must keep records of:

•  Deductions claimed for administrative and operating expenses of the fund
•  Sales/purchases of assets for capital gains tax purposes
•  Tax file numbers of members
•  Deductions claimed for the provision of death and disability benefits for members

Penalties apply if trustees fail to keep the records listed above for the required period.


What do you have to submit to the Tax Office or APRA?

Trustees of self-regulated superannuation funds are required to submit the following to the ATO:

•  Have your financial records audited and lodge the combined income tax and regulatory return with the Tax Office by the due date.

Those funds regulated by APRA must prepare an APRA Annual Return that includes the following forms (after the audit has taken place):

•  Statement of Financial Performance
•  Statement of Financial Position
•  Selected Disclosure of Investments
•  Derivative Financial Instruments
•  Exposure Concentrations
•  Transactions with Associated Parties
•  Membership Profile
•  Superannuation Entity Profile
•  Trustee Statement


Who can be an approved auditor?

The SIS Act defines an 'approved auditor' of a superannuation fund as a member of the Australian Society of Certified Practicing Accountants or a member of the Institute of Chartered Accountants in Australia.

On 23 June 2012, the Minister for Financial Services and Superannuation announced that, from 1 July 2013, auditors must be registered with the Australian Securities and Investments Commission (‘ASIC’) to conduct audits of self managed superannuation funds (‘SMSFs’).

As a significant part of the regulatory framework for self managed funds it is important that the audit is performed independently of the accounts preparation. The standard of independence applied is that contained in the Code of Ethics for Professional Accountants, Section 290. This is applied to all self managed fund auditors not just CA’s and CPA’s.

Amicas Group has a strong affiliation with an SMSF auditing firm who handles the necessary audits for the majority of our SMSF clients. The audit firm has the experience and qualifications required to conduct and issue such Independent Audit Reports. All correspondence can be made directly from us to the auditor to ease your compliance process.


What records does the auditor need?

Essentially, the auditor will need all the information that is listed below. It is best if you have this information already prepared, and then meet with the auditor before the auditor starts any work.

The auditor will need:

•  The Financial Statements and signed audit report from previous year

For the Financial component of the audit:

•  This years signed Financial Statements and Income Tax Return (or tax calculation workpaper).
•  The General Ledger
•  Bank statements of the year and Bank Reconciliation at 30 June
•  Work papers detailing for each asset
•  If fund own direct property:
•  Copy of rates notice showing Lot and Plan number
•  Market valuation (e.g. real estate agents or trustee's valuation)
•  Copy of lease agreement
•  If fund has investment/s in related unit trust/s we require: Financial Statements and supporting documentation.
•  Members statements and work papers for allocations (if allocations are manual)
•  Copy of supporting documents for Investment Income. e.g.
•  Dividends (Dividend Statements)
•  Managed Funds (Annual tax statement)
•  Related Unit Trust (Copy of Tax return)
•  Property (Rental statement)
•  Rollovers (copy of ETP Statements)
•  Contributions: Copy of MCS and confirmation of contributions letter detailing member and employer contributions.
•  Copy of supporting documents for expenses: e.g.
•  Accounting and administration fees
•  Insurance (copy of policy doc's)
•  Property (rates notice, R & M, Insur, etc.)

For the compliance component of the audit:

•  Trust Deed and amendments and copy of Membership applications and consents of trustees
•  List Members and DOB - if they are individual or corporate trustee, include a copy of the latest ASIC annual statement of corporate trustee
•  Are any of the members in a employee - employer relationship?
•  Copy of ATO Notice of Compliance (or APRA)
•  Copy of signed Minutes for year
•  If fund paying pension or benefits have been paid during year
•  Copy of pension request from member to the trustee and acceptance by trustee.
•  Work papers calculating benefits
•  Copy of PAYG Summary and/or ETP Statement/s
•  Copy of BAS/IAS showing tax paid.
•  Copy of actuarial certificate
•  Copy of RBL reporting (including RBL reporting done to establish pension)

The Auditor's Report

The Auditor must provide the trustees with a report on the audit in an 'approved form'. The Tax Office and APRA have worked together to develop an approved audit report form with a view to ensuring consistency with current auditing standards and formats.

The report is separated into 3 sections:

•  Part A of the audit report states the scope of the audit and expresses an opinion on the financial statements.
•  Part B of the audit report sets out the scope of the compliance audit and lists the matters for which an auditor is required to undertake testing with respect to a superannuation entity's compliance with relevant legislation.
•  Part C of the audit report relates to a new requirement for the audit of certain APRA returns, effective for reporting periods beginning on or after 1 July 2003.

The trustee must lodge the audit report with the Tax Office or APRA.


What do you do after the audit?

Self-Managed Superannuation Funds

All self managed superannuation funds must lodge a Self-managed superannuation fund annual return (NAT 71226) which comprises of the income tax, regulatory and member contributions reporting.

The lodgment and payment date for all self managed superannuation funds that prepare their own income tax and regulatory return is 31 October each year.

You must not lodge the income tax and regulatory return until after the audit of the fund has been finalised, as information from the audit report is required to complete the regulatory return.

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