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Many Self Managed Superannuation Funds (SMSFs) require some
form of audit or review to ensure that they are being
administered correctly and that they are compliant. The
tax office and Australian Prudential Regulation Authority (APRA)
place certain requirements on SMSFs under the SIS Act. In order
to avoid penalties SMSFs are regularly audited by approved
auditors.
The information below has been compiled to help answer some
of your questions about superannuation fund audits
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.
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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.
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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
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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.
Michael Quinn is an experienced, qualified auditor and member
the Australian Institute of Chartered Accountants.
For auditing superannuation funds, it is recommended by the
Institute of Chartered Accountants that the Appointed Auditor
follow a standard of independence. This means that it is
recommended that the firm that prepares the tax return not be
the firm that conducts the audit in order to minimise risk of
breaches not being identified or reported. If a firm prepares
the tax return and performs the audit, the fund will be at
increased risk of an ATO audit.
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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)
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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:
1.
Part A of the audit report states the scope of the audit and
expresses an opinion on the financial statements.
2.
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.
3.
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.
The Quinn Group has a specialist auditing division with the
experience and qualifications required to conduct and issue such
Independent Audit Reports and can assist you preparing for your
reporting obligations. For more information
Click here to
submit an
online enquiry form and a consultant will contact
you on the next business day.
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Self-Managed Superannuation Funds
All self managed superannuation funds must lodge annual income
tax and superannuation regulatory information with the Tax
Office using the
Fund income tax and regulatory return (NAT
0658) for the relevant year.
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.
APRA Regulated Superannuation Funds
The APRA Annual Return is required to be lodged with APRA within
4 months after the end of the financial year of the
superannuation entity together with the Independent Audit Report
from the auditor of the superannuation entity covering those
forms that are noted as subject to audit.
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Our dedicated team can assist you with all your auditing
needs.
Complete
and submit the Express Enquiry form on the top right hand side
of this page and we will contact you to discuss your enquiry
or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223
9166 to arrange an
appointment.
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