The federal government’s proposed policy to let well-run SMSFs switch to a three-year audit cycle could include an option for qualifying funds to elect to remain on annual audits and the introduction of a transitional period, an accounting body has revealed.
Chartered Accountants Australia and New Zealand (CAANZ) met with Treasury officials yesterday to discuss the triennial SMSF audit policy proposal and has shared the outcomes.
“It was a very productive meeting and Treasury stressed the purpose of the policy was not to damage auditors as they acknowledge the critical functions auditors serve,” CAANZ said.
The accounting body said Treasury repeated the policy’s objective is to reduce red tape and costs for well-run SMSFs, and it will also include those SMSFs that did not have a key event occur in the fund during a year or particular types of transactions.
Particular events might include commencing or ceasing a pension, and transactions might include limited recourse borrowing arrangements, purchasing, owning or disposing of real estate, and related-party transactions, it said.
Treasury clarified a triennial audit would involve auditing 36 months of a fund’s financial records and Superannuation Industry (Supervision) law compliance, however, trustees could elect to retain annual audits, it revealed.
It is yet to be determined what a “well-run” SMSF means, but it will require trustees to keep good records, as well as have no adverse findings on an auditor report, however, this second point needs to be fleshed out, it said.
Further, Treasury confirmed if a sufficiently large number of SMSFs are likely to be eligible for a three-yearly audit, appropriate transitional arrangements will be put in place, it said.
It said who determines if a fund is eligible, or ceases to be eligible, for a triennial audit has not been finalised.
The policy design and implementation is still being worked on, it said.
Treasury is planning to release a discussion paper about the policy and seek feedback.
After reviewing feedback, legislation will be developed and released in draft form before the end of 2018.