When conducting the annual SMSF audit, auditors must gather sufficient evidence to confirm that:
- the fund owns its reported assets (Part A SMSF Independent Auditor's Report)
- the trustees comply with the asset separation rules (Part B SMSF Independent Auditor's Report).
Regulation 4.09A requires trustees to keep fund assets and money separate from their personal assets, as well as from those held by any standard employer sponsor or their associates. This rule protects fund assets in case of creditor disputes.
To help you meet your obligations, we have published new guidance which outlines the types of evidence you can use to verify asset ownership to comply with regulation 4.09A.
If you cannot confirm the fund owns an asset listed in its financial statements – and the asset is material – you must modify your opinion in Part A of the SMSF Independent Auditor's Report.
Failing to maintain separation of assets results in a contravention of regulation 4.09A. If the contravention is material, you must modify your opinion in Part B of the SMSF Independent Auditor's report.
If the reporting criteria is met, you must also report a regulation 4.09A contravention in an Auditor/actuary contravention report (ACR). This may occur when a company acts as both the SMSF trustee and a business operator and uses the same bank account for both SMSF and business income.
We encourage auditors to review the new guidance. It includes practical examples and outlines the acceptable forms of evidence to support compliance with both asset ownership and separation requirements.
Looking for the latest news for SMSFs? You can stay up to date by visiting our SMSF newsroom and subscribingExternal Link to our monthly SMSF newsletter.