SMSF auditors will need to check for the presence of a range of key documents when a fund is wound up as some advice practitioners and trustees may be unaware they are required to complete that process, an audit specialist has pointed out.
Tactical Super director Deanne Firth said because financial advisers and accountants may not be regularly involved in winding up an SMSF, they often forget to gather critical documentation that must be lodged for the final fund audit.
“People close their super fund, roll out their money and everyone’s happy, but because they are not doing these all the time, they stumble and it’s really difficult for auditors to get the documentation, so there is valuation problems and unreported liabilities,” Firth said at the recent Auditors Institute Auditors Day 2025 in Melbourne.
“The first thing we need to do is to check what the trust deed says about winding up, which is amazing how many people don’t do that.
“You need to check the deed because some of the older deeds have got interesting procedural requirements on how to wind up on the fund and we also need to see a resolution to wind up the fund.”
She added that as part of the wind-up, all liabilities of the fund have to be settled and all assets realised, but this latter requirement often leads practitioners and trustees to make further errors.
“A common mistake on a wind-up, especially where there is a death benefit, is they don’t keep enough money to pay the benefit,” she pointed out.
“We also find if they transfer assets out in specie, they often forget to leave enough cash for capital gains tax, and when they finalise the tax bill on the fund, they don’t have any money left.”
She also noted that in-specie transfers or sales of assets to a related party should be valued at the date of disposal and auditors should look out for any efforts to game those figures.
“With in-species transfers, the transfer dates sometimes don’t match the valuation dates and people pick and choose what price they want,” she said.
“We look at it and see how far out the date is versus the price as people may go a month earlier or later and try and pick the lowest price in that range.
“Have a look at when it actually gets transferred to see what’s happening with the prices. A couple of weeks leeway is probably going to be okay, but once we’re getting into a couple of months, that will be an issue.”
