SMSF audits are an integral part of managing the SMSF industry, but such audits also need to be a little more transparent and a great deal more understandable. There are a lot of myths surrounding SMSF audits. It is critical that they be quashed. Let us reveal the truth about SMSF audit myths below.
Code of Ethics for professional accountants
Let us start with the APES 110 Code of Ethics for professional accountants. It unequivocally says that an ethical clearance letter needs to be sent with regards to any audit engagement. To add, and this one is for the trustees, any correspondence made by the auditors must be answered in quick time by the members and the trustees.
Of course, there will be situations when such correspondences do not meet with quick responses. In such cases, the auditors are expected to use their discretion whether or not to proceed with the engagement.
Reissuance of the engagement letter
There is a need to reissue the engagement letter, especially in cases where the size or the nature of the SMSF alters, trustees change or they misconstrue the reason for/scope of the audit in the first place.
It is not an auditor’s task to figure out on behalf of the trustees whether their investment strategies are sound. It is, however, paramount for an auditor to establish the strategy of audit. In terms of fraud evaluation, the auditors are asked to introduce a combination of ‘scepticism’ and ‘critical assessment’ in order to come up trumps against misappropriations which cannot otherwise be brought to light only through substantive procedures.
How do you think can SMSF audits be made more understandable for laymen?