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Time to revisit SMSF audit arrangements

SMSF auditors should be revising their retainers and reconfirming the veracity of the information being used in the process immediately as the instances of trustees challenging the audit report when a fund suffers loss is on the rise, a specialist lawyer has said.

“It seems to me it’s very valuable now to revisit your audit retainer and upon whom you are relying for your core information because the issue at hand here is who is liable when the loss occurs and the question will be is it you or somebody else,” Argyle Lawyers managing principal Peter Bobbin told the recent Chartered Accountants Australia and New Zealand National SMSF Conference 2015 on the Gold Coast.

“The question will be based on what were your procedures, what was your duty, what was your responsibility and what you were relying upon.”

Bobbin said a recent case where $1 million was lost in an SMSF indicated how all practitioners would be targeted for legal action in those situations in the future.

In that case the financial planner involved committed fraud that led to the loss, however, the SMSF members sued the financial planner as well as the fund’s accountant and auditor.

Bobbin’s advice to auditors is to know exactly what they are required to do under the Superannuation Industry (Supervision) Act and limit their activities to those requirements.

“Audits do two things – it is a verification of the 30 June balance sheet and it is a process as to what occurred during the period,” he said.

“Make sure your audit says nothing more than that.

“And limit the way and approach of the audit that references the 30 June balance date.”

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