ATO, Auditing, Compliance, SMSF

Clean audit file key in case of review

SMSF auditors audit file ATO review

In anticipation of a potential ATO review, SMSF auditors have been advised to maintain essential documents and ensure their audit files are free from irrelevant information.

SMSF auditors should be maintaining streamlined audit files and ensuring they each contain key documents to meet any time demands placed on them in the event the ATO decides to conduct a review of their operations.

BDO Australia superannuation partner Shirley Schaefer emphasised the importance of auditors having key documents readily available for review as there is often a limited timeframe to provide documentation after the ATO has requested it.

“In terms of the request for information from a general practice documents perspective, the ATO is going to want to see a copy of your professional indemnity insurance policy, they’re going to want to see a copy of your continuing professional development records, your Australian Securities and Investments Commission registration and, of course, your ASQM1 auditing manual,” Schaefer told delegates at the SMSF Association Audit Day held today.

“Make sure you provide the full audit file to them, which includes all the audit plans, any work papers and any supporting documents. The ATO will select between three to six files to review and it’s based on these audit files that the [ATO] will determine whether or not you are meeting your obligations.”

She suggested adopting a ‘more is better’ approach in regards to providing documentation for review may not always be the most effective strategy and instead recommended maintaining a clean audit file that excludes irrelevant documents as a more prudent course of action.

“Make sure your files are clean, don’t include things that are not necessary, [however], make sure you include everything that is necessary to support your opinion. Having [documentation] in there that you don’t need is not a good thing,” she said.

“One of the common things we find is that auditors might include all of the bank statements for the entire year in the super fund, but have you looked at all of the bank statements? Have you checked whether the bank account has gone into overdraft at any time? The assumption is that if it’s in your file, you have looked at it and reviewed it.

“If you’re not using a document, if you’ve not reviewed a document, if it doesn’t help to support an opinion, take it out and get rid of it.

“I’ve never been a big believer in a fat file is a good file. Having said that, you do need to make sure that you have enough documentation.”

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