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  • Self-managed superannuation fund independent auditor's report (IAR)

    Changes have been made to the Self-managed super fund independent auditor’s report (IAR) (NAT 11466-07.2019) effective for reporting periods starting on or after 1 July 2019.

    This form replaces the previous form that was effective for reporting periods on or after 1 July 2016, and is no longer available. You may use the new report for audits completed for earlier periods. However, you must take care to comply with the auditing standards and legislation that applied to that earlier period.

    The changes bring the report in line with the equivalent form prepared by auditors of Australian Prudential and Regulation Authority (APRA) funds.

    Recent updates include:

    • additional wording added to make it clearer how auditors can make a modification to the audit report where a qualified or adverse opinion is required. The modification wording for a disclaimer of opinion is in a footnote to the report
    • reordering of paragraphs in Part B, Compliance Engagement. The paragraph which refers to the sections of the Superannuation Industry (Supervision) Act 1993 (SISA) and regulations of the Superannuation Industry (Supervision) Regulations 1994 (SISR) that require compliance assurance (now called the ‘listed provisions’) has been moved under the opinion clause
    • clearly articulating the auditor’s responsibilities so they are more consistent with the auditing standards
    • updating the form to refer to the most recent version of the APES 110 Code of Ethics for Professional Accountants which now includes the independence standards. This was issued in November 2018 and commenced on 1 January 2020. All auditors should be complying with this version of the code when conducting the annual SMSF audit.

    None of the sections or regulations listed at Appendix 1 of the report requiring compliance assurance have been changed.

    You must use the new form for reporting periods starting on or after 1 July 2019. We understand some auditors may have already used the previous version of the form (effective for reporting periods starting on or after 1 July 2016) for the reporting period commencing 1 July 2019 if they were auditing a fund that may have wound up during the 2019–20 income year. If this has occurred, we will still accept the previous version of the form as having met the 2019–20 reporting requirements.

    Refer to new information in the instructions for Modifying Part B of the audit report due to COVID-19 relief specific to 2019–20 and 2020–21 financial years.

    Next step:

    (If you are using this form for audits completed before 1 July 2019, you must comply with the auditing standards and legislation applying to that earlier period.)

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    Independence

    SMSF auditors must comply with prescribed independence requirements as set out in APES 110 – Code of Ethics for Professional Accountants (including Independence standards) (2018) – effective 1 January 2020External Link (PDF 2.7MB) – download from the Accounting Professional and Ethical Standards Board (APESB) website.

    Threats to independence include self-interest, self-review, familiarity, intimidation and advocacy. They may only be eliminated or reduced to an acceptable level by declining or removing yourself from the audit engagement. This includes an engagement to audit the fund where you:

    • are a trustee or director of a corporate trustee or a member of the fund (or both)
    • are a relative of a trustee or director of a corporate trustee or a member of the fund
    • are a business partner with the trustee or director of a corporate trustee or a member of the fund (or both)
    • have prepared the accounts and the statements for the fund being audited (if you are a sole practitioner, this includes instances where an employee has prepared the accounts and statements. If you are a member of a firm, this includes instances where the staff of the firm prepare financial statements unless it is a routine or mechanical service)
    • are reliant on the fees generated from the referral source
    • have engaged the member or trustee of that fund to audit your own SMSF (reciprocal arrangement)
    • provide advice (such as financial or investment) to the fund being audited.

    The independent auditor's report includes a specific commitment that the auditor has complied with auditor independence requirements prescribed by the Superannuation Industry (Supervision) Regulations 1994 (SISR).

    Further guidance on auditor independence and adherence to APES 110 is available in the Joint Accounting Bodies publication – Independence Guide as well as in the Auditing and Assurance Standards Board (AUASB) Guidance Statement GS 009 Auditing Self-Managed Superannuation Funds on the AUASB website.

    See also:

    Last modified: 07 Sep 2020QC 17604