ATO, Auditing

Asset charge warning not new

ATO SMSF auditor asset charge

The obligation for auditors to check for charges on SMSF assets has existed since 2019 and the ATO’s position on the requirement has not changed.

The ATO has confirmed its recent statement requiring SMSF auditors to check there are no charges over assets held within a fund each year is not a new position and the action was driven by the compliance issues arising with the obligation.

ATO superannuation and employer obligations director Paul Delahunty noted fund auditors have had this responsibility since 2019 when it was stipulated in auditing guidance statements issued by the government.

“There hasn’t been a change in the ATO position. In the release we highlighted the importance of the annual property search which has been an important part in gaining assurance that a fund holds properties that are not subject to any charges,” Delahunty told attendees of the recent SMSF Association Audit Day.

“This is not a new ATO position. It’s the reiteration of our existing position in our web content, and an indication of the type of information that we will look to publish as part of ensuring that auditors are addressing the deficiencies we’re seeing in our compliance cases.”

Delahunty acknowledged the warning had received some attention but its purpose was to remind SMSF auditors of their existing obligations in ensuring trustees were compliant with Superannuation Industry (Supervision) (SIS) Regulation 13.14 that prohibits a superannuation fund trustee giving a charge over an asset of the fund.

“The media article did follow the compliance observations we’ve made in regard to auditors gathering evidence of charges over fund assets, for the purposes of SIS regulation 13.14 or I should say the deficiency in auditors gathering evidence in regards to regulation 13.14,” he revealed.

“The purpose of putting out the article was to identify some of those deficiencies and have a broader message to auditors in terms of understanding the expectations in relation to what’s expected under that regulation.”

Delahunty added that Guidance Statement (GS) 009 – Auditing Self-Managed Superannuation Funds, issued by the Auditing and Assurance Standards Board in June 2020, required auditors to check that accounting records and bank statements, personal property securities registers and title searches on property within the SMSF did not identify any charges were being held over assets.

“It’s important to point out, in most cases, we see auditors are gathering this evidence each year as part of forming their auditor opinion,” he said.

“For those cases that have triggered the ATO announcement, we have observed audit files that contain little to no audit evidence or audit file notes that would indicate the auditor has not appropriately considered whether there are charges over the fund’s property assets.

“So [the warning] hasn’t been about shifting the position. It’s about providing advice to auditors as the general population to understand ATO expectations,” he explained.

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