So what is that the ATO will be focusing on when it comes to the audit of superannuation funds for the 2013 year?
As you would expect and rightly so, lets go straight to the SMSF trustee. The ATO will be reviewing to ensure that SMSF trustee understands their obligations and the fund has been set up correctly. ATO is concerned that some funds have been established illegally so that the member has withdrawn their entitlements without satisfying a condition of release. It is of strong concern that many trustees do not fully understand their obligations. As a trustee do you know the rules for operating your fund e.g. number of members, need for membership application forms, consent to act, investment strategy, binding death nomination etc.
Key concern of the audit when operating a self managed superannuation fund is:
- Documenting that the fund is a genuine superannuation fund and it has been established correctly in accordance with ATO legislation.
- Does the fund comply and meet lodgement obligations?
- Good old related party transactions (for some reason, trustee’s often forget this legislation when operating the fund).
- Are prohibited loans in existence within the fund?
- Familiar favourites such as tax losses, non arm’s length transactions, minimum pension payments, exempt current pension income.
Industry sources advise us that the ATO is effectively auditing the auditors. Consider the fact that as auditors, at the minimum auditors should be performing 160 compliance checks for each fund. Self managed super funds as per ATO perspective are required to meet 1,100 income test obligations and yet a staggering 15,100 regulatory checks. From our perspective the audit of a SMSF is not a simple task, it is a complex process requiring a skilled/trained professional to perform the work. AT SMSF Super Auditors we undertake regular ongoing professional education and perform the work using detailed audit plans. We work with trustees to ensure the fund is complying and assist them in educating them as to what a fund can and cannot do.
The ATO uses auditors as another set of eyes via the requirement of us to lodge contravention reports when we find a fund to be non-complying. The ATO view the contravention report as being a key tool in monitoring what trustees are doing with their funds and do they understand their obligations. As auditors, we acknowledge this point and work to assist trustees in retaining the complying status of their funds.
DISCLAIMER: The above is general advice only, you should not act on this advice without consulting a professional adviser to discuss your personal circumstances.