It shouldn’t be a painful process
We understand how important it is for you to maintain business as usual during the audit process, with minimal disruption to your day-to-day operations. We will also work with you to identify weaknesses and assist with suggested rectification procedures.
SMSF audits not only require the review of financial information and application of regulation, but there also needs to be support; for the accountants completing the compliance, the trustee and the members.
Exempt or not exempt – that is the question…
The risks are too great to not get it right.
According to the Associations Act 1981, there are a number of factors determining the need for the provision of financial reports, if and when your entity requires auditing.
Certain types of entities must have their financial reports audited by a registered company auditor.
This is an ASIC requirement
You may be exempt:
For example, if your association has less than $20,000 in revenue and $20,000 in current assets, you may be exempt from having your financial reports audited. Also, a proprietary company may be exempt from having its financial report audited or may otherwise be eligible for audit relief.
Generally, companies are required to lodge reports where:
For example, associations with up to $100,000 in revenue or $100,000 in current assets must be accompanied by a statement by a member of CPA Australia, ICAA, or IPA, or a registered company auditor, that the association has bookkeeping processes in place to adequately record the association’s income and expenditure and dealings with its assets and liabilities.
The risks are too great to not get it right.
Not-for-Profit Registered Entities Need to be Audited
As with other types of businesses, the size of the entity can determine whether or not you are exempt from having your financial statements audited.
According to the Australian Charities and Not-for-profits Commission Act 2012, if you are classified as a small NFP entity (ie. revenue of less than $250,000 for the financial year), you may only be required to provide an information statement to the commissioner in an approved form.
Otherwise, if you are deemed to be medium or large, you must provide annual financial reports, together with an auditor’s or reviewer’s report.
The Process
Auditors follow a set of standards and guidance statements set down by the Auditing and Assurances Standards Board. These standards take into account international and Australian requirements. They can represent a complex web of procedures, policies, methods and regulations that can create a considerable level of complexity not only for the auditors applying them but also for the entities they are being applied to during an audit.
Ensuring that our clients are not smothered in regulation throughout an audit process is one of the most important challenges we take on in any audit.
Essentially the audit procedure undertakes three steps, which are:
The first stage is gain an understanding of the businesses operations and to determine the strength of the entity that is being audited by reviewing and auditing its internal procedures, policies and processes and adherence to these by staff and directors. Now this can include a wide range of audit procedures including but not limited to:
This is the step of testing actual financial figures and financial information. The results of the initial testing noted at one above, will determine just how much of the financial figures will need to be tested and as such how intrusive the audit may be and how thorough. The higher the risk assessment in one above, the more testing that is required.
This testing involves taking samples of data and checking that they have been handled and processed correctly and then checking that they add back to a defined total figure represented within the financial statements of the entity. The financial statements of an entity may be as simple as a profit and loss and balance sheet or as complex as general purpose financial statements for a reporting entity.
This final step involves reaching a conclusion based on the information provided and obtained in one and two above. Ultimately the auditor is looking to determine if the accounts are free of material misstatement and in anyway misleading or incorrect. The auditor will at this time produce an audit report that will be provided to include with the financial statements.
The auditor will also produce a management report which will be provided to the directors and management of the entity for their review. This report will provide a far more detailed appraisal of all of the auditors’ findings and is intended to help the entity improve its operations and procedures.
It is important to note that an auditor acts and reports on behalf of the shareholders and members of entities, as well as any other user of the financial accounts, not the directors and managers and as such they must always maintain and be seen to maintain a level of independence from the entities management.
Other types of audits can be conducted as well including forensic and review engagements which may not be a full blown audit, but require a specific outcome from a set objective and requirement.
All SMSFs Need an Auditor
Did you know that as of July 2013:
SMSF trustees are now required to appoint an approved SMSF Auditor
The SMSF Auditor must be registered with the Australian Securities & Investments Commission (ASIC).
An audit is required even if no contributions or payments are made in the income year.
SMSFs audits are required each year at least 45 days before lodging the SMSF annual return.
Are you a SMSF Trustee?
Did you know that as a SMSF Trustee, you are personally responsible for the compliance of your self-managed super fund?
And YOU are responsible for ensuring that the SMSF is audited as per the stringent requirements of ASIC.
The independence of auditors and accountants preparing compliance accounts and records for SMSF’s is essential.
The policing of this requirement has been taken up by the ATO and ASIC who have put all accountants on notice regarding the requirement and as such all SMSF auditors must be seen to be and must be independent and separate from the accountants completing the compliance work.
We have developed an independent, professional team of SMSF auditors and advisers to provide support to the accounting industry to allow it to meet all of its obligations on behalf of their SMSF clients.
We are cost effective, meet ICAA and CPA professional standards and offer guidance and high level advice regarding complex day to day SMSF queries.