SMSF Auditing, Auditors and the Online Audit Process

  • Ashwin RamdasAshwin Ramdas
  • Updated Dec 19, 2022

  • Mate Checked

    This information has been reviewed by our SMSF Mates before it was published as part of our review process.

Self-managed super funds or SMSFs must be audited each year by an auditor independent of the tax accountant and fund administrator preparing the financial statements. An online SMSF audit refers to an audit process that involves submitting information and interacting with the SMSF audit provider online instead of conventional face to face processes. An online SMSF audit is said to be more cost-effective and efficient in some ways and typically would attract a lower fee. This Q&A will cover how an SMSF audit works, what options are available, the costs, and what information you will have to provide to the auditor.

What is an SMSF audit?

There are a number of ongoing compliance responsibilities that come with operating an SMSF, including the annual tax return and financial audit process. An SMSF auditor will examine the authenticity of the fund’s financial records and ensure the fund is compliant with SMSF laws.

An online SMSF audit consists of two parts: a financial audit and a compliance audit. The financial audit focuses on the SMSF’s financial statements to ensure compliance with Australian Auditing Standards, and the compliance audit confirms that superannuation legislation has been adhered to. An online SMSF audit must be completed by a registered and approved SMSF auditor that has been engaged by the SMSF trustees.

Is there a difference between online SMSF audits and offline audits?

The main difference between online SMSF audits and regular audits is largely centered around the way information and data are collected. There can be differences in how the auditor engages with the trustee(s), either through an online portal and audit software or conventional methods. Some online SMSF audit services will integrate with investment platforms directly and leverage efficiencies in data sharing with the integration of software services. In terms of online audits and offline audits, the costs or fees can be more or less the same, and it ultimately comes down to the following determining costs of the audit report:

  • Types and complexity of the investments
  • Record keeping of the fund and SMSF compliance
  • The accounting system used to reconcile transactions

What is an SMSF auditor?

An SMSF auditor must be registered and authorised by the Australian Securities and Investment Commission (ASIC). Their job is the ensure the financial dealings of the fund comply with superannuation laws. According to the Australian Taxation Office (ATO), an SMSF audit is required even if there is no activity or payments within the year.

The SMSF auditor will provide you with a letter of engagement that outlines what they will be going through during the SMSF audit. They will also provide valuable insights on how the fund is performing, and if they request any information relevant to the fund, you must provide it within 14 days. Having an experienced and independent professional specialist is the best way to ensure all calculations and figures are correct, which may negatively impact the SMSF.

Who can audit an SMSF?

SMSF auditors must be approved by ASIC and be compliant with the ASIC competency standards, specifically the ASIC Class Order 12/1687 Competency standards for SMSF approved auditors. The competency standards align closely with the requirements for SMSF auditors that are issued by accounting bodies.

Competency requirements for SMSF auditors are mandatory for members of professional accounting bodies who wish to complete this type of work. Public service providers who are conducting SMSF audits must meet the following standards:

  • Hold a professional accounting body practising certificate of which they are a current member.
  • Ensure professional indemnity insurance cover is held continuously.
  • Complete continuous professional development training, made up of at least 30 hours in a rolling three year period (8 hours of superannuation, 8 hours of financial and compliance audit training and 4 hours of financial accounting training).
  • Ensure that anyone undertaking work on their behalf has adequate experience and knowledge and are supervised during the SMSF audit.

How much does a self-managed super fund audit cost?

SMSF audits can vary in price, and unfortunately, there are no set guidelines on what auditors can charge for completing an SMSF audit. Data collected from the ATO shows that an SMSF audit costs around $690 on average over the 2019/2020 financial year.

The SMSF audit fee statistics listed below were released by the ATO in February 2021, taken from data between 30 June 2015 and 30 June 2019.

SMSF Audit fee range 2014–2015 2015–2016 2016–2017 2017–2018 2018–2019
$0 to $499 36.5% 36.9% 37.6% 38.4% 37.9%
$500 to $999 47.8% 48.9% 49.7% 50.2% 50.4% 49.7% 50.2%
$1,000 to $1,999 12.0% 11.5% 11.0% 10.5% 9.8% 9.8% 9.9%
$2,000 and above 3.4% 3.1% 2.8% 2.4% 2.1% 2.1% 1.9%

How often are SMSF audits required?

According to the ATO, an SMSF audit is required each year prior to lodging your annual return, and they stipulate that you must appoint an SMSF auditor 45 days before the return is due to be lodged. Failure to lodge your return on time may incur financial penalties. A separate reason that your SMSF audit has to be finalised prior to lodging your return is that you will need some information from the SMSF audit to complete the return correctly. It is also a requirement to list the SMSF auditor’s details in the return.

Why is it essential to use an ASIC registered SMSF auditor?

SMSF auditors need to be registered with ASIC due to their important responsibilities. They are to ensure that your SMSF complies with superannuation legislation and verify the accuracy of the SMSF’s accounting records. An SMSF auditor not only supports trustees with the management of their retirement savings; they also assist in the overall health of the SMSF industry.

Chartered Accountants ANZ and other professional accounting organisations set out criteria which SMSF auditors have to meet, alongside ASIC’s eligibility criteria. The standards required are listed below:

  • Complete all initial training requirements, including a course that focuses on the auditing process of SMSFs and complies with regulations set out by your professional accounting body.
  • Hold a current practising certificate issued by the professional accounting body that you hold a membership with (CA, CPA, NIA).
  • Complete 120 hours of continuing professional development (CPD) training in a three-year period. This must include 30 hours focusing on superannuation and 8 hours auditing SMSFs.
  • Ensure all approved SMSF auditors involved in the audit have the required knowledge, experience, training and adequate supervision.
  • Have adequate Professional Indemnity insurance.

What else should I know?

Before undertaking an online SMSF audit, you will have to provide the auditor with all financial information relating to the SMSF in the previous financial year, including bank statements and transaction data. You will also need to give the auditor a trustee representation letter confirming that the financial statements are correct and comply with relevant superannuation laws—any information required by the online SMSF auditor within 14 days, according to the Australian Tax Office. Once the SMSF audit is completed, the SMSF auditor will provide you with an independent report. If there are any issues, they will work with you for the best course of action. Any breaches must be reported to the ATO by your auditor, even if they have been resolved. Maintaining transparency during the online SMSF audit is best to ensure the fund remains compliant and eligible for any tax concessions.

General Advice Warning

Ashwin Ramdas

Eventum Consulting

Ashwin is an accountant and educator based in Perth, Western Australia. He is passionate about helping family owned businesses and startups. He is one of the founders of SMSF Mate and you’ll regularly see him on our podcast!

Ashwin is a managing owner and director of Eventum Consulting, a multidisciplinary firm helping clients with finance, succession planning and their tax needs. He also served as a lecturer in taxation and small business at the Central Institute of Technology, and has worked as an accountant at a number of well-known tax specialists.

Ashwin studied a Diploma of Business Education and a Bachelor of Commerce in Financial Accounting, Managerial Accounting and Corporate Finance, both at Curtin University, WA.

Ashwin is passionate about technology, and sees it as an enabler for his clients to grow truly sustainable and profitable businesses.

You can find out more about Ashwin or connect with him on Linkedin here:

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  • SMSF Mate is a unique website because it has ideas about how to approach SMSFs, insurance and other financial topics that come straight from first hand experience. It's much more useful than what you find on all the other financial websites that just offer generic info that you could easily get on the ATO's website. It's also nice to know there's no financial incentive behind the information, it's legitimately there to help people understand self-managed super funds and how to get the most out of them, not to get an affiliate commission from a broker or other financial services provider. The investment product information is also incredibly useful, I've never seen this kind of functionality on any other website that let's you look at such a wide range of products, sort by what info is most interesting or important to you, and subscribe to updates for different funds and financial products all in one place. Definitely worth checking out if you own or are considering an SMSF!

    David G, Self-Employed, SMSF Owner
  • SMSF Mate provides a unique insight into superannuation and financial topics in a way that is easier to understand than conventional websites. The colloquial nature of the site makes it easy to understand and they often speak about complicated topics in lamens terms so I can wrap my head around them. The investment product information is a great way to research funds that I am interested in investing in with my SMSF and there is a lot of helpful information on the site for better structuring my investment portfolio. In comparison to other websites which offer similar information, SMSF Mate excels as the information is free to access whereas many other sites charge a subscription fee for the same thing. Overall, I think SMSF Mate is a great resource for SMSF trustees and is worth looking at for a variety of super-related topics. Thanks.

    Tim B, Business Owner, SMSF Trustee