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Auditor reporting requirements to trustees

SMSF auditors must provide trustees with an independent auditor's report (IAR) and details of contraventions.

Last updated 12 August 2020

As a self-managed super fund (SMSF) auditor, you are required to give the trustees an SMSF independent auditor's report (IAR) on the fund’s operations for the financial year. You also need to advise trustees about contraventions and whether the financial position of the fund is about to become unsatisfactory.

You need to give the trustees the IAR within 28 days of receiving all relevant documentation, drawing attention to any financial and compliance issues identified during the audit.

You must report using the approved form: Self-managed superannuation fund independent auditor's report (IAR) (NAT 11466-07.2019).

Independent auditor's report (IAR)

The independent auditor's report (IAR) outlines:

  • the SMSF trustees' responsibilities
  • the auditor's responsibilities, consistent with the Australian Auditing Standards and Standards on Assurance Engagements
  • your opinion on whether the financial report fairly represents the financial position of the fund and its operational results, in Part A
  • your opinion on whether the trustees of the fund have complied with the listed provisions under the Superannuation Industry (Supervision) Act 1993 (SISA) and the Superannuation Industry (Supervision) Regulations 1994 (SISR), in Part B.

Auditor contravention report (ACR)

At the time of the annual audit you must also advise trustees immediately about any contraventions that may have occurred, may be occurring, or may occur.

You can do this by issuing a management letter to the trustee. Where the contraventions meet the ACR reporting criteria, you must provide us with an ACR for the fund and you may also provide a copy to the trustee. Lodge your ACR with us within 28 days of completing the audit report.

If you also determine that the financial position of the SMSF may be or may be about to become unsatisfactory, you should report this in Section F of the ACR.

By notifying the trustees as soon as you detect a contravention, they can respond to the issue and, if possible, rectify, or have a plan in place to rectify, the issue before you finalise the audit.

When is the financial position of the fund unsatisfactory?

If the SMSF is an accumulation fund, its financial position is unsatisfactory if, in the opinion of the auditor, either:

  • the fund's assets are inadequate to cover the aggregate benefit accounts of the fund members, or
  • the value of fund assets is inadequate to cover the value of the fund's liabilities in respect of benefits accrued to fund members.

If the SMSF is a defined benefit fund, the test is whether the value of fund assets is inadequate to cover the value of the fund's liabilities in respect of benefits vested in the fund members.

The likelihood of the value of fund assets being inadequate must be based on the reasonable expectation of an actuary, on whose advice the auditor has relied on in relation to the matter.