When winding up an SMSF, there are specific requirements SMSF trustees must attend to, including appointing an SMSF auditor to undertake the final audit. The SMSF auditor's responsibilities in these circumstances include:
- Checking the fund complies with wind-up requirements
- Your reporting obligations.
Checking the fund complies with wind-up requirements
As an SMSF auditor, there are extra audit checks you need to consider when undertaking the final SMSF audit for an SMSF that is winding up. These include checking that:
- any wind-up requirements in the trust deed have been met
- all members agreed in writing to the wind up
- the financial statements correctly account for assets, liabilities, income, expenses and final allocations to and payments from member accounts
- no accrued income or expenses are overdue at the wind-up date apart from estimated tax accruals awaiting the SMSF’s final tax assessment
- asset disposals occurred at market value (based on verifiable evidence provided by the trustees). Market value of collectables disposed of to a related party, including as an in-specie super payment, must be supported by a written valuation from a qualified independent valuer
- benefits were only paid to members who met a condition of release (where the member provided written confirmation to the trustees), to eligible beneficiaries or to the legal personal representative
- benefits were transferred to and received by a complying superannuation fund for members who did not meet a condition of release
- you have written representation from the trustees confirming that any bank transactions occurring after the audit will comply with the super laws. This will apply when trustees leave the fund’s bank account open to accommodate a final tax liability or tax refund which must subsequently be paid or transferred according to the payment standards in the super regulations.
Your reporting obligations
If you find evidence of non-compliance with the super laws or you haven't been provided with sufficient appropriate audit evidence to support your opinion, you should qualify the auditor’s report.
Where the trustees have left the SMSF's bank account open, you can add a qualification to the auditor’s report. The qualification should say that you are unable to verify the compliance of transactions occurring after the audit date because the SMSF bank account has remained open to receive the final tax refund or pay the final tax liability.
If the SMSF has contravened reportable provisions of the super laws, you must lodge an Auditor/actuary contravention report with us and notify the trustees in writing.
Even where there is no evidence of non-compliance, it is good practice to provide a final management letter to the trustees reminding them of their remaining obligations to formally wind up the SMSF, including:
- lodging the final SMSF annual return
- keeping the SMSF bank account open to pay the final tax liability or receive a tax refund
- keeping all records required under the super laws, including those specific to the wind up, for at least 10 years following lodgment of the final SMSF annual return.
- Valuation guidelines for self-managed super funds
- Completing the auditor/actuary contravention report
- Winding up for trustees