If you have a self-managed super fund (SMSF), you are required to undergo a number of financial and compliance checks, particularly around tax time.
SMSFs may be entitled to tax breaks on their investment income, but only if they follow particular rules. One of these rules involves needing to be audited each year by an approved SMSF auditor. In this article, we’ll cover what an SMSF audit involves, how much it costs and what information you need to give your auditor.
What is an SMSF audit?
SMSFs require auditing every year before an annual tax return can be lodged. An SMSF audit is conducted by an ASIC-registered auditor, whose job is to check that the financial statements are correct and that your fund complies with super laws. An audit is required even if no contributions or payments are made in the financial year, according to the Australian Taxation Office (ATO).
An SMSF audit will also provide you with valuable information on how your fund is tracking. An auditor will provide you with a letter of engagement which outlines what they will do during the audit. If they require more information, you must provide it within 14 days. A review by an experienced and independent specialist can also be a great way of ensuring there are no errors or incorrect digits in calculations which could reflect negatively on your fund.
How much does an SMSF audit cost?
While there are no strict guidelines on what approved auditors can charge to conduct an SMSF audit, ATO data shows an SMSF audit cost $686 on average in the 2018-19 financial year. Below are the latest SMSF audit fee statistics from the ATO, which draw on data collected from the years ended 30 June 2015 to 30 June 2019 and were published in February 2021.
← Mobile/tablet users, scroll sideways to view full table →
| Average and median SMSF auditor fees | |||||
| SMSF auditor fees | 2018-19 | 2017-18 | 2016-17 | 2015-16 | 2014-15 |
| Average auditor fees | $686 | $690 | $695 | $704 | $760 |
| Median auditor fees | $550 | $550 | $550 | $550 | $550 |
| Distribution (%) of SMSFs by audit fee range, by financial year | |||||
| Audit fee range | 2018-19 | 2017-18 | 2016-17 | 2015-16 | 2014-15 |
| >$0 to $499 | 37.9% | 38.4% | 37.5% | 36.9% | 36.5% |
| $500 to $999 | 50.2% | 49.7% | 49.9% | 50.1% | 49.6% |
| $1,000 to $1,999 | 9.9% | 9.8% | 10.2% | 10.6% | 11.0% |
| $2,000 and above | 1.9% | 2.1% | 2.3% | 2.4% | 2.8% |
| Total | 100% | 100% | 100% | 100% | 100% |
When do you need an SMSF Audit?
The ATO notes that an SMSF audit is required every year before you lodge an annual return. There are a few important steps you need to take to ensure you meet the necessary deadlines. The ATO website stipulates that you must appoint an SMSF auditor at least 45 days before your annual return is due to be lodged. If you don’t lodge your return on time, financial penalties apply.
Another reason your SMSF’s audit must be finalised before you lodge your SAR (SMSF annual return), says the ATO, is that you’ll need some information from the audit report to complete the SAR. You must also ensure that the correct auditor details are provided in the SAR, otherwise you may be penalised.
Compare Superannuation Funds with Canstar
To view the past performance of all super funds, rated by Canstar, use our comparison tool:
What do you need for an SMSF audit?
Before undergoing an audit, you will need to provide your auditor with information about your accounts and transactions for the previous financial year. You will also need to provide them with a trustee representation letter which confirms the financial statements are correct and they have complied with the applicable super laws. Any additional information requested by your SMSF auditor must also be provided within 14 days, according to the ATO.
Once your SMSF audit is completed, you will be given an independent auditor’s report. If there are any issues, your auditor will work with you on the best course of action. The ATO website states that some breaches must be reported to the ATO by the auditor, even if they’ve been resolved. It’s important to be transparent with your SMSF auditor so they can help to keep you on track and remain eligible for tax concessions.
Cover image source: MIND AND I/Shutterstock.com.
Thanks for visiting Canstar, Australia’s biggest financial comparison site*
This content was reviewed by Finance and Lifestyle Editor Shay Waraker and Sub Editor Tom Letts as part of our fact-checking process.
Share this article