Challenges in Conducting SMSF Audits – a 6 program on-demand webinar series

Program 1: Unpacking ATO Guidance on Asset Valuations

The SMSF auditor role has become even more challenging with the recent updating of ATO guidance on what evidence is required to support the market value of assets. This session delves into the guidance material to assist auditors in understanding their obligations, including:

• What is acceptable audit evidence for:

• residential property
• commercial property
• unlisted shares or units

• Dealing with the challenges of obtaining sufficient audit evidence
• How often is audit evidence for valuations required?
• Reporting obligations where audit evidence is insufficient
• Awareness of attempts to under or over value investments to benefit in the low tax rate SMSF environment i.e.:

• in specie transfers and CGT manipulation
• total super balance and transfer balance cap manipulation
• achieving lower pension drawdown requirements

• Risk management versus ATO expectations versus ASA 500 requirements versus professional judgement
• Practical examples using various valuation scenarios

Program 2: SMSFs Tax: How Far Does an Auditor Need to Go and Know?

The world of tax and superannuation can be complicated, with the only certainty seemingly being constant change and complexity. This session aims to bring auditors up to speed on recent changes as well as highlighting the areas that may expose the greater risk, including:

• Recent changes in thresholds, including:

• concessional and carry forward contributions
• non-concessional and downsizer contributions
• total balance cap

• Tax treatment of Covid-19 re-contributions
• What tax related issues should an auditor be looking for?
• How valuations can have an impact on the fund’s tax implications i.e.:

• in specie contributions
• total super balance and TBAR

• Issues with auditing contributions from employee share schemes

• Being on the lookout for possible manipulation techniques that attempt to:

• increase the amount in the concessionally taxed SMSF environment
• make use of the exempt current pension income rules

Program 3: Auditor Contravention Report Guidelines: The What, When and How

In the course of an SMSF auditor’s role, contraventions of the SISA or SISR may be uncovered. While the ACR regime may initially appear deceptively simple, the question of what, when and to whom to report, may not be that straightforward. Through practical case studies, this session examines the key issues, including:

• What are the reporting criteria to determine reportable contraventions?
• What if the audit engagement is terminated prior to the audit being finalised?
• What are the reporting requirements for a sec. 66 SISA 1993 breach in one year, that remains unrectified in following years?
• When professional judgement can be applied to determine if a reportable event has occurred
• What other information, whilst not a contravention, should be reported?
• What contraventions arising from Covid relief measures are not reportable?
• ACRs and real property valuation issues
• Practical examples of qualified audit reports and the ACRs required

Program 4: NALI Just Got a Whole Lot Gnarlier

The recent release of ATO’s LCR 2021/2 provides detailed guidance on the interaction between expenditure under a non-arm’s length arrangement and the effect this can have on the taxing of a fund’s income. This session drills down on the content of the ruling from an SMSF auditor’s perspective, including:

• When minor breaches can have a material impact
• The extent of auditor enquiry and testing expected from the ATO
• Practical guidance on the extent of audit testing for accounting costs that may trigger NALI
• The future CGT implications when taking over the audit of a fund that has previously incurred non-arm’s length expenditure on an asset
• The implication that non-arm’s length audit fees can have on the taxing of the fund
• Possible interaction between in specie contributions and NALI/NALE
• ATO’s compliance approach to LCR 2021/2
• Practical examples where NALI and NALE can have a material impact on the financial results of a fund

Program 5: Death Benefits and the Role of the SMSF Auditor

Cases concerning dissatisfied beneficiaries of SMSFs are ever on the increase and some say this is the next big issues for auditor risk exposure. But just how far does an auditor need to go to ensure their processes wil withstand a challenge from a disgruntled party? This session delves into the issues, including:

• A checklist of:

• what to cover on the death of a member
• red flags that may require further investigation by the auditor

• Binding death benefit nominations:

• are they in accordance with the deed? (Hill v Zuda Pty Ltd [2021] WASCA 59)
• to what extent does an auditor need to review them?

• Trustee decisions and discretion for benefit payments:

• are they in accordance with the deed?
• what audit evidence is required to support decisions are valid? (Stock v NM Superannuation Pty Ltd [2015] FCA 612)

• Auditors aren’t lawyers, so when is it prudent to obtain a lawyer to cover off?
• What is the auditor’s obligation to raising risk? (Ryan Wealth Holdings Pty Ltd v Baumgartner NSW SC [1502])
  • Case studies, including a 2nd marriage, 3 children, 2 receiving benefits and perceived favourable treatment - what are the audit issues of concern?

Program 6: Auditing Pensions: Where to Start?

The audit of pensions payments goes beyond the actual pension withdrawals. Consideration needs to be had to a range of requirements that allowed the pension to commence in the first place. This session looks into the audit requirements for pension payments, including:

• Meeting a condition of release to allow a pension to commence, including:

• the 60 - 65 tricky bracket
• special conditions of release
• receiving a TRIS and turning 65

• What type of audit evidence sufficiently supports:

• a condition of release?
• the preservation component?

• What happens if a member having met a condition of release and receiving a pension, subsequently receives employer superannuation contributions?
• Underpaying a pension by mistake, the 12 month rule and how often can it be used
• Audit implications for not meeting the pension drawdown requirements
• Auditing the managing of the assets that support exempt current pension income in a combined accumulation/pension fund
• A checklist of audit requirements for a pension
• Case studies