The SISA requires trustees of a self-managed superannuation fund to produce a set of financial reports each year. The following will assist trustees in ensurig they comply with the regulations:
Trustee must keep records and adequate evidence that will allow for the for the preparation of annual financial reports and Annual return of the SMSF, and allow for a convenient and proper audit. (SISA s.35AE). These records must be retained for at least 5 years.
The financial reports must consist of a Statement of Financial Position (Balance Sheet) and an Operating Statement. (Profit & Loss Statement). They must be signed by at least 2 trustees/directors of the trustee company, except where the fund is a single member fund with a single director trustee company. (SISA s.35B). This must occur before the accounts are audited.
Trustees must appoint an auditor for the SMSF no later than 45 days before the due date for lodgement of the fund's Annual return. (SISA s.35C & r.8.02A). Signed Letters of Engagement and Trustee Representation letters are to be provided to the audtor prior to the commencement of the audit.
Member statements - The SISA does not specifically state that a fund must prepare member statements every year, however it is recommended that the trustees do so. Member statements should at least include the value of member funds as at 30 June each year, together with the preservation and tax components of the fund balance. Member reports and records must be retained by the trustees for as long as they are relevant, and for at least 10 years. (SISA s.105(1)(a) Such reports must be made available for inspection by a member staff of the regulator if requested to do so. (SISA s.105(1)(b)).
Trustees must maintain adequate audit evidence to allow for the preparation of the financial reports each year, and for the audit of those reports. If an auditor has not been provided with adequate audit evidence, the auditor can request that information from the trustee in writing. If the trustee then fails to provide the requested information with 14 days, the trustee is then in breach of SISA s.35C(2). This is a reportable breach of the SISA.
To assist trustees, we have prepared an audit checklist. This is available for download. Please note the checklist is not exhaustive and should be used as a guide. Our advice is that it is better to supply too much evidence than too little.
Details of the audit of a SMSF must be reported in the Fund's Annual return. Currently this is done at Question 6. That question requires details of the Fund's auditor, please the date the audit was completed and whether Parts A and B of the Independent Auditors Report were qualified. Annually, the ATO does contact auditors seeking confirmation they did complete the audit as detailed in Question 6, and that the reported date of the audit is correct. Discrepancies may lead to further investigation by the ATO.
About Annual Reporting