The ATO has reminded SMSF auditors of the need to supply stronger evidence to support the professional opinions they provide, noting issues it has flagged before continue to be areas of concern.
In an update on its website, the regulator stated it continues to see SMSF audit files where the documentation provided does not adequately support the opinion reached.
“Some audit files contain a large amount of documentation, but that does not always amount to sufficient and appropriate evidence to support your opinion. Your file should clearly show how the evidence supports the conclusion you reached,” it stated.
“Valuation evidence remains a recurring issue. Evidence used to verify market value under Regulation 8.02B of the Superannuation Industry (Supervision) Regulations 1994 must be supportable and objective.
“For example, an online property valuation without comparable sales would not be sufficient. Nor would a holding statement that shows the value of a listed security without independent verification of the closing price from an approved stock exchange.
“Where evidence does not clearly support the market value, your file should show what further inquiries you made and how you reached your conclusion.”
It added quality audit files showed clear links between sufficient and appropriate audit evidence and each conclusion made in an independent auditor’s report, and pointed practitioners to its SMSF auditor checklist, which highlights the documentation and evidence it commonly examines.
“Before finalising your audit, ask yourself: have you obtained enough relevant and reliable evidence, and does your file clearly show how that evidence supports your conclusions? Taking this step strengthens audit quality and reduces avoidable deficiencies identified through our reviews,” the update said.
The reminder is the second issued to SMSF auditors by the regulator in the past week after it recently called for them to include a signed and dated trustee representation letter (TRL) in their audit files.
As with the notice issued today, the ATO flagged an ongoing level of non-compliance in this area, stating it continued to identify unqualified SMSF audits that did not include a compliant TRL, adding that such a letter was a key part of audit evidence.
At that time, it stated recent reviews of SMSF audits had found TRLs were missing, left unsigned or undated, were incomplete or signed after the completion of an audit.
