Auditors and trustees must maintain strong and complete documentation for every SMSF audit. The Australian Taxation Office has increased its attention on audit quality. You protect your fund and reduce your risk when you keep your documents accurate, organised and easy to verify.
Audit documentation supports the entire audit process. It confirms that the work followed the required standards. It provides evidence when auditors form their opinion. It also protects both auditors and trustees if the ATO reviews the audit. Poor documentation creates avoidable problems. Incomplete files can lead to questions from regulators. Weak evidence can force an auditor to modify the audit report or lodge a contravention report.
You avoid these risks when you follow clear documentation standards.
Audit files must show how the auditor planned the audit, how they identified risks and how they addressed those risks. The files must show the audit procedures performed and the outcomes of those procedures. They must also show the auditor’s reasoning and conclusions. A strong file builds confidence that all rules and requirements were followed.
Auditors must prepare and maintain several key documents. These include:
- A clear engagement letter.
- An audit plan with the proposed approach.
- Records of risk assessments.
- Work papers showing test procedures and results.
- Checklists used during the audit.
- Notes on professional judgments.
- All correspondence with the trustees.
- A signed representation letter from trustees.
- A management letter when issues arise.
The audit file must remain separate from the client’s normal accounting documents. The file must remain secure for at least seven years. This requirement ensures the record is available if regulators review past audits.
Trustees must also understand their role. You support the audit when you keep your fund’s records accurate and up to date. You must give the auditor full access to the documents they request. These include the trust deed, financial statements, bank statements, investment records, contribution records, minutes, valuation reports, loan documents and any other records related to the fund.
When your records are complete you reduce delays. You also reduce the chance of the auditor identifying compliance issues. Strong records give the auditor confidence that the fund meets superannuation laws.
The ATO has increased its attention on audit evidence. It now reviews audit files more often. It looks for gaps in documentation. It checks whether the file supports the conclusions in the audit report. You should expect more scrutiny in areas such as asset valuations, investment rules and trustee behaviour. You should also expect questions about borrowing arrangements, related party transactions and compliance with contribution caps.
Your documentation must prove that the fund followed the rules in each of these areas. Auditors must ensure that valuations are reasonable, that transactions comply with the trust deed and that investments follow the investment strategy. The audit file must show how the auditor reached their conclusion.
Trustees can support this process by maintaining organised records throughout the year. You can reduce problems by preparing key documents before the audit starts. You can keep valuation reports updated. You can keep minutes clear and consistent. You can store contribution and pension records in a stable format. You can also maintain investment documents in a single location.
RG Partners & Associates recommends that you build a clear documentation system. Store all important SMSF documents in a structured folder. Keep financial statements and bank statements together. Keep trust deeds, variations and investment strategies together. Store valuations in a separate folder each year. Keep minutes in chronological order.
We also recommend that auditors confirm early those trustees have provided all requested documents. Early requests reduce delays later. Auditors should prepare a detailed audit plan and document every step of their work. Work papers should be clear and concise. Correspondence should be organised by date. Audit conclusions should be supported by specific evidence in the file.
These habits reduce compliance risks. They create a clean audit trail that stands up to ATO review. They also protect trustees by showing that the fund meets its obligations.
When you maintain strong audit files you strengthen trust. You support fund members. You protect your retirement savings.
RG Partners & Associates can help you prepare and review your SMSF records. We help ensure that your documentation meets current standards. We support a smooth audit process. Contact our team if you want a review of your fund’s documentation or guidance on meeting audit requirements.
Reference: Australian Taxation Office
