OVERVIEW
To ensure compliance with the rules, the Australian Taxation Office (ATO) as the regulator of SMSFs places reliance on the work of SMSF auditors. It is a legislative requirement that the financial statements of all SMSFs are audited each year. In many respects, the integrity of the SMSF industry relies on the conduct of a quality audit by competent practitioners.
Approved SMSF auditors are required to be registered with the Australian Securities and Investments Commission (ASIC). The legislation covers the requirements that must be met to enable registration with ASIC, competency standards and independence requirements.
LEARNING OUTCOMES
On completing this module, students should be able to:
• understand the regulatory framework that applies to SMSF auditors
• understand the SMSF audit registration and ongoing education requirements
• identify the connection between the auditor competency requirements set by ASIC, professional bodies and the professional and audit standards
• apply the auditor independence requirements.
OVERVIEW
It is easy to focus on the demands of practice in performing an engagement rather than the vehicle used in one’s modus operandi. But safety checks before entering the freeway are a good idea. For the SMSF auditor, they are essential.
Prior to the acceptance of any audit engagement, the auditor is required to perform preliminary procedures to assess whether it is appropriate that the audit engagement is accepted. These preliminary activities include the satisfaction of fundamental ethical requirements, quality control procedures and independence assessments. The auditor is required to document the agreed terms of the engagement addressing specific objects in the engagement document.
Whether the audit is a new engagement or a continuing engagement, the auditor is required to have established acceptance and continuance procedures. This module will examine these vital preliminary audit activities and the engagement process
LEARNING OUTCOMES
On completing this module, students should be able to:
• describe the preliminary audit engagement activities
• explain the audit engagement process
• apply the acceptance and continuance procedures
• explain the requirements and objectives of the audit engagement letter.
OVERVIEW
Under section 35B(1) of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act), self-managed superannuation fund (SMSF) trustees are required to ensure that a statement of financial position and an operating statement is prepared for each financial year. Section 35C of the SIS Act requires that those financial statements are audited by an approved SMSF auditor.
This module examines the processes and procedures required in undertaking the audit of the financial statements. This is Part A of the Australian Taxation Office (ATO) prescribed audit report — Self-managed superannuation fund independent auditor’s report (2-15).
The previous modules have laid the foundation, covering the audit framework, preliminary audit procedures, and the preparation of the audit plan which is essential for conducting the audit.
This module looks at the practical application of these areas with regards to Part A of the SMSF audit.
LEARNING OUTCOMES
On completing this module, participants should be able to:
• explain and apply the audit objectives that apply to the various transactions and classes of transactions in financial statement audit
• identify the key components of financial statement assertions the auditor is required to consider when conducting the audit
• explain the audit evidence and audit procedures required when testing the financial statement assertions
• practical application of the audit framework and audit standards in conducting an audit of the financial report (Part A).
OVERVIEW
As part of the audit process, the auditor seeks to reduce the risk of material misstatement to a suitably low level. The identification and assessment of actual or potential risk is therefore a key part of the audit process. A risk assessment will assist the auditor in determining the appropriate audit procedures based on the characteristics of the fund. Some high-risk areas for SMSFs include the risk of fraud, complex transactions, related party transactions and breaches of the SIS Act and SIS Regulations.
When it comes to audit evidence, there are several risk considerations in relation to its source, nature and circumstances under which it is obtained. For example, should the audit procedures differ where financial reporting processes are provided by SMSF software companies using data feeds? The assessment and consideration of risk facilitates the auditor’s design, documentation and implementation of the audit plan.
The materiality level set by the auditor will impact the risk of material misstatement. Materiality relies on the auditor exercising their professional judgement rather than the use of a prescriptive method of calculation. The auditor must use their skill, expertise, and experience to assess the information and documentation. The application of these audit procedures establishes the foundation for the audit and the nature and extent of the audit activities to be undertaken by the auditor.
LEARNING OUTCOMES
On completing this module, participants should be able to:
• discuss the audit planning process and purpose
• explain risk, types and sources of risk and the impact of risk on the audit
• discuss the importance and timing of materiality and the processes in assessing and documenting
• understand the relationship between planning the audit, risk and materiality and their role in establishing the nature and scope of the aud
OVERVIEW
The SMSF auditor must form an opinion on the SMSF’s compliance with prescribed requirements of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) and Superannuation Industry (Supervision) Regulations 1994 (Cth) (SIS Regulations). This comprises Part B of the audit report and is generally referred to as ‘the compliance audit’.
SMSF trustees are required to comply with legislative obligations in the SIS Act and SIS Regulations that relate to the fund’s operation and administration. Trustees have many compliance obligations. For this reason, SMSFs are not for the faint-hearted or careless. The SMSF auditor is a vital cog in the SMSF compliance landscape. As a regulator, the ATO prescribes a list of specific sections and regulations against which the auditor must evaluate and report on fund compliance. The regulator’s guidance is a minimum standard. The auditor may include other sections or regulations as suitable criteria in the compliance engagement.
The full list of reportable provisions is set out in QC45566. If an SMSF is found to be non-compliant, the trustees may be liable for fines and administrative penalties. In the worst contingency, the SMSF may lose its complying status and the significant benefits that complying funds enjoy, in addition to attracting some very nasty tax consequences. But more on this later.
In this module, we continue our examination of the compliance audit with a focus on the investment rules.
We also examine the compliance requirements for the preparation of an SMSF’s investment strategy and the implications this requirement has for the auditor.
LEARNING OUTCOMES
On completing this module, participants should be able to:
• explain and apply the audit objectives that apply to the compliance audit (Part B) with respect to the investments audit and requirement to prepare an investment strategy.
• identify the key components and source of the compliance audit the auditor is required to consider when conducting the audit
• explain the audit evidence and audit procedures applicable to the compliance audit
• practical application of the audit framework and audit standards in conducting an audit of the compliance audit (Part B).
SMSF Specialist Auditors that cancel their membership may regain their SSAud designation if they rejoin as an Associate within 3 years of ceasing their membership and complete the SSAud Designation Exam.
OVERVIEW
The SMSF Specialist Auditor (SSAud®) program meets part of the compliance requirements to become a Registered SMSF Auditor.
You will examine the requirements of the Australian Auditing Standards and how they should be applied in an SMSF audit. In addition, the practical relationship between the Superannuation Industry (Supervision) Act 1993 (SIS Act) compliance audit of an SMSF and the Auditing Standards will be analysed. Specifically, the subject covers the auditor’s reporting obligations in relation to SIS compliance to both the trustees and the Australian Taxation Office.
It is specifically designed for audit professionals seeking recognition for their specialist skills and knowledge required through statutory obligations, Auditing & Assurance Standards and AUASB Guidance Statements. This Accredited Specialist designation program is designed to be completed within twelve (12) weeks of entering the program.
To audit a self-managed super fund, an auditor must be a qualified member of an approved professional organisation. As of 1 July 2013, the rules changed and now SMSF Auditors must be registered with ASIC.
When held in conjunction with an accounting degree, the SMSF Association SSAud® will satisfy the education requirements of the ASIC Auditor Registration, as it is registered as an approved program under the SMSF Auditor regulations (SIS 9A.02)
LEARNING OUTCOMES:
On successful completion, you should be able to:
1. Undertake research on significant SMSF auditing issues
2. Apply the Auditing Standards to identify compliance issues in an SMSF
3. Complete an SMSF audit that is compliant with both Australian Auditing Standards and SIS Regulations
4. Create the required Australian Taxation Office reports and Fund reports