The Part B compliance audit requires consideration of several compliance matters, including:
- Fund structural and residency requirements
- Contributions and benefit payments
In completing this part of the engagement, the SMSF auditor needs a thorough understanding of both superannuation and income tax legislation and supporting regulations.
What is a contribution? When can a contribution be accepted by the SMSF? What are the auditor’s obligations in relation to excess contributions or age-related restrictions? What are the audit requirements in regard to pensions, death benefits, and member insurance?
This Module takes a deep dive into these questions. It explores audit requirements involving contributions and the withdrawal of superannuation benefits, both during a member’s life and after death. It also explores the compliance audit considerations relating to trustee administrative obligations, SMSF structure, and residency.
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) in respect of the trustee obligations and the SMSF definition
- 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).
The final step in the audit process is to form an opinion and prepare the audit report. Once this is done, the audit results must then be communicated.
This Module examines the multiple facets of SMSF auditor reporting:
Reporting to whom?
The SMSF auditor must report to both fund trustees and the ATO as regulator. Reporting to each is a separate obligation and must be understood to ensure auditors discharge their duty to the regulator and provide the trustees with a timely and informative report.
Reporting on what?
The SMSF auditor conducts two engagements side by side. They must form an opinion regarding both the financial statements (Part A) and the fund’s compliance (Part B). The auditor must then express their opinion appropriately. This Module explores the requirements set out in the auditing standards together with ATO’s reporting criteria.
Learning outcomes
On completing this module, participants should be able to:
- understand the structure and components of the SMSF audit report
- apply the modification of an auditor’s opinion
- understand the auditors’ reporting obligations under the SIS Act and the audit standards
- explain and apply the auditor’s reporting obligations to the ATO as the regulator.
The module Audit Planning and Risk covers the preparation of the audit strategy, the audit plan, identification and assessment of risk and the key concept of materiality.
The module also covers the different types of audit evidence and the types of risk presented by ongoing advancement in accounting and audit software.
While the processes and procedures performed at this stage set the scene for the completion of the audit, materiality and risk are considered throughout the audit process.
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 audit
The Module Conducting the Audit – Part A examines the processes and procedures performed by the auditor when auditing the financial statements.
Some of the questions answered are:
- How do audit procedures differ where the prior year audit was performed by another auditor?
- What are the different audit assertions that should be tested?
- What are the different types of audit procedures that can be applied?
- What audit evidence should the auditor obtain?
- What are the relevant accounting policies and tax considerations?
The module covers all the key items and auditor’s obligations in relation to the financial statement 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).
The Part B compliance audit requires an in-depth knowledge of investment rules contained in the Superannuation Industry (Supervision) Act 1993 and supporting regulations. The SMSF auditor must not only be familiar with the rules but must also remain alert to warning signs that something has gone wrong. The auditor must implement robust procedures that support their compliance audit opinion.
The Module covers the usual suspects, including the requirement for market valuations, arm’s length dealing, in-house assets rules, prohibition against financial assistance, and the borrowing provisions. The sole purpose test and investment strategy are also explored from the auditor’s viewpoint, as is the compliance standard for derivative investment and the debated application of SIS Regulation 4.09A.
At each point, the Module unpacks both the investment rules and the auditor’s obligations in navigating this terrain.
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).
The module Being an SMSF auditor is the starting point for both the aspiring and experienced auditor. It outlines both the initial and ongoing requirements that need to be met by SMSF auditors, including the application of the independence requirements.
Auditors need to be aware of not only the Superannuation Industry (Supervision) Act 1993, Superannuation Industry (Supervision) Regulations 1994 and ASIC requirements, but also the requirements imposed by their respective professional body, including quality control standards and other professional and audit standards.
A heavy reliance is placed on the work performed by SMSF auditors and the integrity of the SMSF industry relies on the conduct of a quality audit by competent practitioners.
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.
The module Audit Standards examines the framework for conducting an SMSF audit as provided within the Audit and Assurance Engagement Standards. The module explores the structure and interpretation of the auditing standards following adoption of the ‘Clarity’ format, and considers how these standards apply to the financial and compliance parts of an SMSF audit engagement. The contribution of GS 009 in navigating this framework is also examined.
This module is the ‘hub’ from which all other SSAud modules spring to form the whole wheel that is the SMSF audit process.
LEARNING OUTCOMES
On completing this module, participants should be able to:
- explain the audit standards framework and apply to the audit of SMSFs.
- understand the structure of the audit standards, how they are understood, interpreted and applied.
- explain the professional standards and the requirements for the auditor to comply with the relevant auditing standards.
- explain the application of the relevant standards and framework as they apply to Part A and Part B of the SMSF approved auditor’s report.
The module Preliminary engagement activities covers the acceptance and continuance procedures for both new or continuing audit engagements.
This includes the satisfaction of fundamental ethical requirements, quality control procedures and independence assessments. Where auditors complete all SMSF audits for an accounting firm, this provides additional variables to consider.
The module provides auditors with a detailed understanding of the key considerations that form part or the acceptance of an audit engagement.
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.