Why audit SMSFs?

The National SMSF Conference 2010 is continuing today and I’ve been having a great time attending sessions and meeting members. Feedback has been really valuable – members really appreciate the opportunity to hear from experts and build up their skills in the SMSF sector.

Yesterday, I attended a panel session on auditor independence. Interestingly, during the Q&A session, panellists were asked why do we need to audit SMSFs at all? While the answer may seem obvious to members, it may not be for some of your clients.

The first and most apparent reason to audit SMSFs is that it is required by law. However, while not all laws appear to stem from sound policy principles, I believe this one does. There are some good reasons for auditing SMSFs, not least of which is that it is in the public interest.

As you know, an SMSF has access to significant tax concessions. It is therefore essential for the public (and the regulator) to be comfortable that each fund abides by the law to ensure paying tax remains a fair and equitable process for all. An independent audit is an important part of this process.

What many people don’t realise, however, is that many SMSF trustees find a lot of value in the audit function. An auditor can provide independent and beneficial advice for trustees, extending their service beyond the role of compliance to one which helps trustees keep their fund on track and address any areas of concern as they arise.

The SMSF sector continues to show strong growth. The audit function is central to ensuring SMSFs can be used (not abused) effectively to maximise retirement savings for many Australians.

What do you think? Do you find auditing SMSFs a positive process?