Proposal to extend SMSF audit cycle
Tactical Super director Deanne Firth said the first thing auditors do when they receive the financial statements is compare the prior year figures to the prior year audited financials and make sure everything carries forward correctly.
“Currently an SMSF is audited under the Australian Auditing Standards. These standards do allow for instances where you have not been provided with the prior year audit. You have to do additional testing on the opening balances,” she explained.
“Consider two risk areas, the cost base and member components. Without an audit of the prior two years’ financials we can’t ascertain whether those components are correct unless we do additional testing on the prior year’s figures, basically resulting in an audit of the financials since the last audit. Unless we complete this additional work we couldn’t sign off on the audit under the Australian Auditing Standards.”
Ms Firth said it is also likely to lead to a greater administration cost to the ATO as they will need to keep track of the audit of each fund that is due, and which SMSFs are on the “good list or the naughty list”.
“How much will the SMSF levy be increased by to cover this cost?” said Ms Firth.
Click here to read the full article in SMSF Adviser.