Previous guidance and how the ATO manages auditor guidance
The ATO has updated key self-managed superannuation fund (SMSF) auditor guidance following industry consultation, clarifying that unreimbursed establishment costs paid before an SMSF is established do not give rise to a contribution.
Guidance on disqualified trustee checks has also been revised to better align with the Auditing and Assurance Standards Board Guidance Statement GS 009, with auditors expected to:
- obtain trustee declarations
- undertake periodic eligibility checks, and
- perform additional verification where elevated risk indicators are present.
Significant changes to the 2026 SMSF annual return include mandatory reporting of all modified audit opinions and auditor fees. 'Auditor fee' fields must now be completed for all returns, with lodgments rejected if left blank.
The ATO intends to use fee data as a compliance risk indicator to identify potential low-cost audits and possible fee misclassification practices.
We are continuing to develop and update guidance in emerging and complex areas, including crypto assets, Limited Recourse Borrowing Arrangements and business real property. Auditors were encouraged to monitor SMSF News and ato.gov.au updates to remain informed of evolving guidance, legislative changes and compliance expectations.
Payday Super
Payday Super commenced on 1 July 2026, introducing new requirements for SMSFs to maintain accurate fund details, including an active electronic service address (ESA), to ensure employer contributions can be received without disruption.
The new Member verification request (MVR) process enables employers to validate member and fund details before making contributions, reducing rejected payments and improving contribution accuracy.
SMSFs are also expected to transition towards new payments platform capability under updated SuperStream standards, although existing payment methods remain available and the focus is on trustees making reasonable efforts to comply. Trustees should confirm their ESA provider remains active. Inactive messaging services may prevent contributions from being directed to their SMSF.
The ATO advised Payday Super:
- does not create new auditor reporting obligations
- is primarily an awareness issue for auditors rather than a compliance reporting matter.
Early implementation has been positive, with strong contribution volumes, successful MVR processing, effective Single Touch Payroll reporting and only minor operational issues identified.
Division 296
Division 296 commenced on 1 July 2026 and introduces additional tax on earnings attributable to super balances above $3 million and $10 million, with the tax assessed to individual members rather than SMSFs.
SMSFs will play a key reporting role by providing Division 296 earnings information and member-attributable earnings through new fields in the 2027 SMSF annual return.
The reforms are expected to increase actuarial involvement and place significantly greater emphasis on accurate market valuations, as asset values directly affect total super balances and potential Division 296 liabilities. The ATO has identified valuations and timely lodgment as key compliance focus areas and will closely monitor funds with members likely to exceed the relevant thresholds.
While Division 296 does not create new auditor reporting obligations or form part of the individual auto registration or auditor contravention report process, auditors can support compliance by:
- identifying valuation concerns,
- highlighting reporting issues, and
- raising risks through management letters where appropriate.
SMSFs may also elect a one-off 'capital gains tax cost base reset' for eligible assets as at 30 June 2026 for Division 296 purposes, subject to specific conditions and valuation evidence requirements.
Crypto guidance discussion
The ATO advised that its draft crypto asset auditor guidance will be revised following extensive industry feedback. It will ensure:
- auditor responsibilities are not overstated and remain consistent with existing investment strategy requirements, and
- trust deeds do not need to specifically reference cryptocurrency, provided they contain broad investment powers permitted under the Superannuation Industry (Supervision) Act 1993.
A key theme of the discussion was the difficulty auditors face obtaining sufficient and appropriate evidence for crypto assets. Particularly around ownership, existence, valuation and control.
We acknowledged that where adequate assurance reports or evidence over custody and controls cannot be obtained, a 'Part A audit qualification' may be appropriate, with auditors expected to apply professional judgement when determining additional audit procedures.
The guidance will place greater emphasis on demonstrating SMSF control of crypto assets through wallet access, blockchain records and transaction evidence rather than formal wallet registration. The ATO will further consider stakeholder feedback on:
- ownership and control evidence
- exchange-held assets
- reliance on third-party reports
- service organisation reports
- the circumstances in which audit qualifications may be necessary.
Australian Securities and Investments Commission
Australian Securities and Investments Commission (ASIC) financial year 2025–26 regulatory outcomes remained consistent with prior years, with:
- 8 SMSF auditors disqualified
- 3 suspended
- 10 subject to conditions
- 42 registrations cancelled, largely due to inactivity or failure to meet administrative obligations.
ASIC noted that removing inactive auditors remains important to reduce the risk of registration numbers being misused for fraudulent or criminal purposes.
Auditor independence continues to be ASIC's primary enforcement focus, with a shift towards stronger regulatory action where independence requirements are compromised, particularly in relation to in-house audit arrangements. ASIC indicated that tribunal reviews of enforcement decisions may help provide greater clarity and guidance on independence expectations across the profession.
ASIC is also pursuing several regulatory and administrative improvements, including enhancements to its Regulatory Portal, SMSF auditor annual statement processes, and communications with auditors.
Future work will include:
- reviewing the SMSF auditor examination framework
- consideration of updates to registration guidance
- consulting with industry on alternative pathways into the SMSF audit profession.
Auditing and Assurance Standards Board
Restructure of the Standard Setting Boards and the Financial Reporting Council (FRC)
Legislation associated with the External Reporting Australia (ERA) entity was given legislative green light on 1 July 2026. The Treasury Laws Amendment (Financial Reporting System Reform) Act 2026, merging the FRC, Australian Accounting Standards Board and the Auditing and Assurance Standards Board (AUASB) into a single entity called 'ERA', received Royal Assent on 6 July 2026.
Accordingly, the transitional period within which the FRC is empowered to take certain preparatory steps to establish ERA’s internal governance arrangement, formally commenced on 7 July 2026. ERA’s operations will start on 1 December 2026.
The AUASB has undertaken a revision of Guidance Statement GS 007 Use of Service Organisations for investment management services (GS 007). This project has been in progress for 18 months and has a project advisory group that have met up to 10 times to discuss the issue areas which have resulted in revisions.
The final draft GS 007 will go to the AUASB meeting on 12 August for final approval. It was noted at the meeting that type 2 reports under 'Auditing Standard 402' and 'The Standard on Assurance Engagements ASAE 3402' are not always easy to access or provide appropriate audit evidence.
The AUASB committed to looking into the revisions to GS 007 (regarding the communications between the user and service auditor) and whether this could be improved in the revision.
The AUASB continues to work on other projects including:
- Exposure draft on the proposed International Standard on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity reviews – they are currently consulting on to inform their submission to the International Auditing and Assurance Standards Board on 3 September 2026.
- Standard on Sustainability Assurance ASSA 5000 General Requirements for Sustainability Assurance Engagements – meeting with practitioners and other stakeholders to understand implementation issues in the first mandatory period for reporting under Australian Sustainability Reporting Standard AASB S2 Climate-elated Disclosures Standard and assuring certain disclosures applying ASSA 5000.
Auditor compliance program
The ATO’s '2025–26 Auditor compliance program' completed 191 reviews/audits, resulting in 39 auditors referred to ASIC and 83 education outcomes. The overall results remaining consistent with previous years. High-risk auditor audits continued to produce significant compliance outcomes, with 95% resulting in regulatory action and more than half leading to ASIC referrals, highlighting ongoing concerns in some areas of audit quality.
The most common deficiencies identified related to:
- insufficient evidence of asset ownership and existence
- market valuation compliance
- related party transactions
- charges over fund assets
- evidence of ATO trustee declarations.
Additional review programs covering market valuations, high-volume auditors, auditor independence, and registration requirements were largely education focused. Although some matters escalated into full audits and a notable number of auditors voluntarily deregistered.
Looking ahead to 2026–27, the ATO will significantly increase its focus on market valuation compliance, particularly in support of Division 296 implementation, and continue reviewing property assets for potential charges or encumbrances under Regulation 13.14.
A new review program targeting newly registered auditors will also be introduced to support audit quality through early education, intervention and ongoing monitoring.
Trustee representation letters
Trustee representation letters remain an important audit tool but are not always sufficient on their own, particularly for higher-risk or material matters. The discussion highlighted that auditors may need to obtain additional evidence where key documentation is unavailable, such as for property lease arrangements, loans, related-party transactions or significant fund assets, with the extent of testing driven by risk and materiality.
Participants noted that trustee declarations have inherent limitations and should not be treated as conclusive evidence. Auditors are expected to exercise professional scepticism, perform appropriate enquiries, seek independent verification where necessary, and maintain an understanding of related-party relationships through ongoing review of leases, loans, transactions and ownership structures.
A key takeaway was that audit quality is driven by robust documentation, professional judgement and corroborating evidence rather than reliance on signed declarations alone. Trustee representations should support audit conclusions, but not replace appropriate audit procedures, independent verification and clearly documented audit evidence.