OVERVIEW
The SMSF auditor must form an opinion on the SMSF’s compliance with prescribed requirements of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) and Superannuation Industry (Supervision) Regulations 1994 (Cth) (SIS Regulations). This comprises Part B of the audit report and is generally referred to as ‘the compliance audit’.

SMSF trustees are required to comply with legislative obligations in the SIS Act and SIS Regulations that relate to the fund’s operation and administration. Trustees have many compliance obligations. For this reason, SMSFs are not for the faint-hearted or careless. The SMSF auditor is a vital cog in the SMSF compliance landscape. As a regulator, the ATO prescribes a list of specific sections and regulations against which the auditor must evaluate and report on fund compliance. The regulator’s guidance is a minimum standard. The auditor may include other sections or regulations as suitable criteria in the compliance engagement.

The full list of reportable provisions is set out in QC45566. If an SMSF is found to be non-compliant, the trustees may be liable for fines and administrative penalties. In the worst contingency, the SMSF may lose its complying status and the significant benefits that complying funds enjoy, in addition to attracting some very nasty tax consequences. But more on this later.

In this module, we continue our examination of the compliance audit with a focus on the investment rules.

We also examine the compliance requirements for the preparation of an SMSF’s investment strategy and the implications this requirement has for the auditor.

LEARNING OUTCOMES
On completing this module, participants should be able to:
• explain and apply the audit objectives that apply to the compliance audit (Part B) with respect to the investments audit and requirement to prepare an investment strategy.
• identify the key components and source of the compliance audit the auditor is required to consider when conducting the audit
• explain the audit evidence and audit procedures applicable to the compliance audit
• practical application of the audit framework and audit standards in conducting an audit of the compliance audit (Part B).