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QUALITY REVIEW PROGRAMREVIEW OF SMSF AUDIT ENGAGEMENT QUESTIONNAIRE

INTRODUCTION

Review Code(s)

Reviewer

INSTRUCTIONS FOR THE REVIEWERSThis questionnaire has been designed to help you assess whether the audit of Self-Managed Superannuation Funds (SMSFs) have been conducted in accordance with relevant professional standards and legislation.

Non-compliance with mandatory legislative requirements or professional standards is to be reported in the quality review report under the heading ‘Reviewer’s Summary – Matters Leading To Assurance Recommendation/Matters Leading to Follow Up Recommendation’. Instances involving breaches of non-mandatory legislative requirements or professional standards, as well as any comments you may provide on how the member’s policies and procedures may be improved are to be listed in ‘Reviewer’s Summary – Other Matters’.

Please ensure all reports issued are in accordance with the requirements outlined in the ‘Guidelines for the Preparation of Reports on Review Findings’ on all occasions.

The questions in this questionnaire are to be answered as you review client files. Where there are two or more partners, separate questionnaires for each partner must be completed.

Given that audit-related services have generally represented the most significant breach area, the focus is on reviewing evidence, not just asking questions.

Please note this questionnaire does not consider all requirements as specified in the Australian Auditing and Assurance standards and the Superannuation Industry (Supervision) Act 1993 (SIS Act) and Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations).

Reviewers should refer to the Australian Auditing and Assurance Standards, SIS Act and SIS Regulations for detail regarding all requirements in assessing whether the audit of SMSF engagements have been conducted in accordance with relevant legislative requirements and professional standards.

LEGEND

(Y) Yes – Reviewer is satisfied with evidence sighted.

(N) No – Reviewer is not satisfied with evidence (or lack thereof) sighted and requires appropriate noting/recording.

(N/A) Not applicable – Review item is not applicable to file selected.

PRIVACY

In this Privacy Statement, “Personal Information” has the same meaning as in the Privacy Act 1988 (Cth).

CPA Australia Ltd is committed to protecting the privacy and security of the Personal Information which it holds about you.

The Personal Information which you provide us with in this Questionnaire will be used by CPA Australia Ltd to process your Quality Review; and may be used for aggregated statistics for monitoring and research. This information may be viewed by the CPA Australia Quality Review Advisory Committee and also the Financial Reporting Council and any other Regulatory authority.

If you do not provide us with this Personal Information, we may not be able to process your review.

You have the right to access any Personal Information which CPA Australia Ltd holds about you, subject to the exceptions in the Privacy Act 1988 (Cth). You may also request the correction of information which is inaccurate. Access and/or correction requests can be made at your local CPA Australia office.

For more information on CPA Australia’s Privacy Policy, visit our website at cpaaustralia.com.au/privacypolicy

http://www.cpaaustralia.com.au/privacypolicy

3 | Review of SMSF Audit Engagement QuestionnaireC

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CLIENT AUTHORITY

1. Has permission been obtained from clients for the peer review of their file?

* Each client’s authority must be obtained before reviewing their file. If insufficient files exist for which client permission has been provided, and accordingly you believe it not possible to form an opinion based on the small sample size, contact the Quality Review Department at CPA Australia.

QUALITY CONTROL

2. Has the member established and maintained a system of quality control in accordance with these standards? (ASQC1; ASAE 3000.31-33; ASAE 3100.15; APES 320)

Note: If answered ‘No’ to the above, the member is in breach of ASQC1; ASAE 3000.31-33; ASAE 3100.15; APES 320.

COMMENTS

INDEPENDENCE AND OTHER ETHICAL REQUIREMENTS

3. Has the member, as the auditor, complied with the relevant ethical requirements, including those pertaining to independence, when performing the audit engagement (both financial and compliance audit)? (ASA 102.5; ASA 200.14; ASAE 3000.Aus20.1; ASAE 3100.12; and APES 110.290)

Note: If answered ‘No’ to the above, the member is in breach of ASA 102.5; ASA 200.14; ASAE 3000.Aus20.1; ASAE 3100.12; and APES 110.290.

4. Has the member included the following in the audit documentation:

a. issues identified with respect to compliance with relevant ethical requirements and how they were resolved?

b. conclusions on compliance with independence requirements that apply to the audit engagement, and any relevant discussions with the firm that support these conclusions? (AU: ASA 220.24a-b)

Note: If answered ‘No’ to the above, the member is in breach of ASA 220.24a-b.


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ACCEPTANCE AND CONTINUANCE PROCEDURES

Acceptance and Continuance Procedures: Preconditions for the audit

5. Has the member performed the following procedures in order to establish the preconditions for an audit?

a. determining whether the financial reporting framework to be applied in the preparation of the financial report is acceptable (ASA 210.6(a))?

b. obtaining the agreement of trustees that they acknowledge and understand their responsibility (ASA 210.6(b))?

Note: If answered ‘No’ to the above, the member is in breach of ASA 210.6.

6. Is there evidence on file that the member has performed acceptance and continuance procedures applicable to the engagement as outlined in their quality control manual, for either new or recurring engagement, prior to commencing the engagement? (ASAE 3000.21-26 and ASAE 3100.17)

Note: If answered ‘No’ to the above, the member is in breach of ASAE 3000.21-26 and ASAE 3100.17

7. Where the member has other person(s) undertaking work on their behalf has the member ensured the person(s) has appropriate competence and capabilities to perform the audit engagement in accordance with Australian Auditing Standards, relevant ethical requirements; and applicable legal and regulatory requirements? (ASA 220.14(a))

Note: If answered ‘No’ to the above, the member is in breach of ASA 220.14(a).

Acceptance and Continuance Procedures: Terms of Engagements

8. Has the member agreed the terms of the audit engagement with the trustees in an audit engagement letter or other suitable form of written agreement? (ASA 210.9-10); Where the compliance engagement is undertaken pursuant to legislation, has the minimum applicable compliance engagement terms contained in the legislation been included? (ASAE 3000.27; ASAE 3100.19)

Note: If answered ‘No’ to the above, the member is in breach of ASA 210.9-10; ASAE 3000.27; ASAE 3100.19.

9. Have the following factors been included in the audit engagement letter?

a. The objective and scope of the audit of the financial report

b. The responsibilities of the auditor

c. The responsibilities of the trustees

d. Identification of the applicable financial reporting framework for the preparation of the financial report; and

e. Reference to the expected form and content of any reports to be issued by the auditor and a statement that there may be circumstances in which a report may differ from its expected form and content. (ASA 210.10)

Note: If answered ‘No’ to the above, the member is in member is in breach of ASA 210.10.


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10. For recurring audits, when circumstances have arisen which would require the term of audit engagement to be revised, has the member reminded the trustee(s) of the existing terms of the audit engagement? (ASA 210.13; ASAE 3000.28)

Note: If answered ‘No’ to the above, the member is in breach of ASA 210.13; ASAE 3000.28.

11. Has the member communicated with the trustees, the responsibilities of the auditor in relation to the financial report audit? (ASA 260.14)


12. Has the member included in the audit documentation, conclusions reached regarding the acceptance and continuance of client relationships and audit engagements? (ASA 220.24(c))

Note: If answered ‘No’ to the above, the member is in breach of ASA 220.24(c).

Please provide explanation accordingly in the proceeding comment box

COMMENTS


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AUDIT PLAN AND PROCEDURES

13. Does the file contain an audit strategy (ASA 300.7 and ASA 300.8) and an audit plan (ASA 300.9)?

Note: If answered ‘No’ to the above, the member is in breach of ASA 300.7-8 and/or ASA 300.9.

14. Has the member planned the nature, timing, and extent of direction and supervision of engagement team members and the review of their work? (ASA 300.11)


15. Has the member planned the engagement so that it would be performed effectively (ASAE 3000.40 and ASAE 3100.22); Has the member communicated with the trustees an overview of the planned scope and timing of the audit? (ASA 260.15)

Note: If answered ‘No’ to the above, the member is in breach of ASA 260.15; ASAE 3000.40 and ASAE 3100.22.

Audit Plan and Procedures: Initial Audit Engagement

16. For initial audit engagement:

a. Has the member communicated with the predecessor auditor, in compliance with relevant ethical requirements? (ASA 300.13(b))

b. Has the member obtained sufficient appropriate audit evidence about whether the opening balances contain misstatement that materially affect the current period’s financial report? (ASA 510.6)

c. If the member was unable to obtain sufficient appropriate audit evidence regarding the opening balances, has the member expressed a qualified opinion or disclaimed an opinion on the financial report? (ASA 510.10)

Note: If answered ‘No’ to the above, the member is in breach of ASA 300.13(b), and/or ASA 510.6, and/or ASA 510.10 (as applicable).

Please provide the necessary explanation in the proceeding comments box.

COMMENTS


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Audit Plan and Procedures: Understanding the Client and Risk Assessment

17. Has the member performed the required understanding of the fund and its environment, including the Fund’s internal control, sufficient to identify and assess the risk of material misstatements and to design and perform further evidence-gathering procedures? (ASA 315.11-12; ASAE 3000.45-49; and ASAE 3100.28)

Note: If answered ‘No’ to the above, the member is in breach of ASA 315.11-12; ASAE 3000.45-49; and ASAE 3100.28.

18. Has the member identified and assessed the risks of material misstatement at:

a. the financial report level; and

b. the assertion level for classes of transactions, account balances, and disclosures to provide a basis for designing and performing further audit procedures?

(ASA 315.25)


19. Has the member included in the audit documentation, the understanding and risk assessment, as referred to in questions 17 and 18, respectively? (ASA 315.32)


20. Has the member performed the following procedures to obtain information for use in identifying and assessing the risk of material misstatement due to fraud:

a. made enquiries of the trustees and others within the fund; (ASA 240.17-19)

b. made enquires of those charged with governance where not all of them are involved in the management of the fund; (ASA 240.20-21)

c. evaluated whether unusual or unexpected relationships that have been identified may indicate risks of material misstatement due to fraud; (ASA 240.22)

d. considered whether other information obtained indicates risks of material misstatement due to fraud; ( ASA 240.23)

e. evaluated whether the information obtained from the other risk assessment procedures and related activities performed indicates that one or more fraud risk factors are present? (AU: ASA 240.24)

Note: If answered ‘No’ to the above, the member is in breach.

Please identify the relevant paragraph(s) of ASA 240 that the member has breached in the comment box.

COMMENTS


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21. When documenting the understanding of the entity and its environment and the assessment of the risks of material misstatement, did the member include the following:

a. the significant decisions reached during the discussion among the engagement team regarding the susceptibility of the entity’s financial report to material misstatement due to fraud; and

b. the identified and assessed risks of material misstatement due to fraud at the financial report level and at assertion level?

(ASA 240.44)


22. Where the member used information obtained from previous experience with the entity and from previous audits, did the member determined whether changes have occurred since the previous audits that may affect its relevance to the current audit? (ASA 315.9)


23. Has the member included in the audit documentation their general understanding of the legal and regulatory framework applicable to the entity and the industry or sector in which the entity operates and how the entity is complying with that framework? (ASA 250.12)


24. Has the member designed and performed audit procedures in order to identify litigation and claims involving the entity which may give risk to a risk of material misstatement? (ASA 502.3)


25. Where the member suspected that there may be non-compliance with laws and regulations, did the member:

a. discuss the matter with the trustees and where appropriate, those charged with governance

b. receive sufficient information to support the entity’s compliance, or evaluate the effect of the lack of sufficient appropriate audit evidence on the member’s opinion?

c. evaluate the implications of non-compliance in relation to other aspects of the audit and take appropriate action?

(ASA 250.19-21)

Note: If answered ‘No’ to the above, the member is in breach of ASA 250.19-21

26. Has the member included in the audit documentation, the identified or suspected non-compliance with laws and regulations and the results of discussion with trustees and, where applicable, those charged with governance and other parties outside the fund? (ASA 250.29)

Note: If answered ‘No’ to the above, the member is in breach of ASA 250.29

27. Has the member, as part of the risk assessment procedures, obtained information relevant to identifying the risks of material misstatement associated with related party relationships and transactions? (ASA 550.11-17)

Note: If answered ‘No’ to the above, the member is in breach of ASA 550.11-17.


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28. Has the member, included in the audit documentation, the names of the identified related parties and the nature of the related party relationship? (ASA 550.28)


29. Has the member, as part of the risk assessment procedures, obtain an understanding of the following in order to provide a basis for the identification and assessment of the risks of material misstatement for accounting estimates:

a. the requirement of the applicable financial reporting framework relevant to accounting estimates, including related disclosures?

b. how trustees identifies those transactions, events, and conditions that may give rise to the need for accounting estimates to be recognized or disclosed in the financial report; and

c. how trustees make the accounting estimates and an understanding of the data on which they are based?

(ASA 540.8)


30. Has the member, as part of the risk assessment procedures, considered whether events or conditions exist that may cast significant doubt on the entity’s ability to continue as a going concern and determined whether the trustees has already performed a preliminary assessment of the fund’s ability to continue as a going concern? (ASA 570.10)



COMMENTS

Audit Plan and Procedures: Auditor’s Response to the Assessed Risks

31. Has the member designed and implemented overall responses to address the assessed risks of material misstatement at the financial report level? (ASA 330.5)


32. Has the member designed and performed further audit procedures, including substantive procedures, whose nature, timing, and extent are based on and are responsive to the assessed risks of material misstatement at the assertion level? (ASA 330.6; ASA 330.18 and ASA 520.5)

Note: If answered ‘No’ to the above, the member is in breach of ASA 330.6; ASA 330.18 and ASA 520.5.


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33. Has the member included in the audit documentation:

a. The overall responses to address the assessed risk of material misstatement at the financial report level, and the nature, timing, and extent of the further audit procedures performed;

b. The linkage of those procedures with the assessed risk at the assertion level; and

c. The results of the audit procedures, including the conclusions where there are not otherwise clear?

(ASA 330.28)


34. Has the member included the following in the audit documentation:

a. the overall responses to the assessed risks of material misstatement due to fraud at the financial report level and at the assertion level? (ASA 240.45(a))

b. the results of the audit procedures, including those designed to address the risks of management of override of controls? (ASA 240.45(b))

c. communication about fraud made to the trustees, those charged with governance, regulators, and others? (ASA 240.46)

d. conclusion about the presumption that there is a risk of material misstatement due to fraud related to revenue recognition is not applicable in the circumstances of the engagement, and included the reasons for that conclusion? (ASA 240.47)

Note: If answered ‘No’ to the above, the member is in breach.

Please identify the relevant paragraph(s) of ASA 240 that the member has breached in the comment box.

COMMENTS

35. If the member planned to use the audit evidence from a previous audit about the operating effectiveness of specific controls, has the member established the continuing relevance of that evidence by obtaining audit evidence about whether significant changes in those controls have occurred subsequent to the previous audit and documented the conclusion reached about relying on such controls? (ASA 330.14 and ASA 330.29)

Note: If answered ‘No’ to the above, the member is in breach of (ASA 330.14 and ASA 330.29).

36. If the member planned to rely on controls over a risk where the member has determined to be a significant risk, has the member tested those controls in the current period and evaluated the operating effectiveness of those controls? (AU: ASA 330.15-17)


37. Has the member’s substantive procedures included the following audit procedures related to the financial report closing process:

a. agreeing or reconciling the financial report with the underlying accounting records?

b. examining material journal entries and other adjustments made during the course of preparing the financial report? (ASA 330.20 and ASA 330.30)

Note: If answered ‘No’ to the above, the member is in breach of ASA 330.20 and ASA 330.30.


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38. Has the member considered whether external confirmation procedures are to be performed as substantive audit procedures? (ASA 330.19)


If answered ‘Yes’, please refer to ‘Other Procedures: External Confirmations’

39. Did the member consider engagement risk when planning and performing the engagement and reduce the engagement risk to an acceptable level in the circumstances of the compliance engagement? (ASAE 3100.40 and ASAE 3100.43)

Note: If answered ‘No’ to the above, the member is in breach of ASAE 3100.40 and ASAE 3100.43.

40. If the member found any compliance breaches that are material, has the member evaluated the impact on the member’s planned engagement approach? (ASAE 3100.49)

Note: If answered ‘No’ to the above, the member is in breach of ASAE 3100.49.


COMMENTS

Audit Plan and Procedures: Materiality

41. Has the member determined materiality for the financial report as a whole (overall materiality) and, if applicable, the materiality level or levels for particular classes of transactions, account balances, or disclosure? (ASA 320.10)


42. Has the member determined performance materiality? (ASA 320.11)


43. Has the member included in the audit documentation, the following amounts and factors considered in their determination:

a. Materiality for the financial report as a whole

b. If applicable, the materiality level or levels for particular classes of transactions, account balances, or disclosure

c. Performance materiality

d. Any revision of (a)-(c) as the audit progressed?

(ASA 320.14)



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44. Did the member consider materiality when planning and performing compliance engagement? (ASAE 3000.44 and ASAE 3100.40)


Audit Plan and Procedures: Audit Sampling and Audit Evidence

45. When designing and performing audit procedures, has the member considered the relevance and reliability of the information to be used as audit evidence? (ASA 500.7)


46. When the information to be used as audit evidence has been prepared using the work of a management’s expert, did the member, having regard to the significance of that expert’s work for the audit purposes:

a. Evaluate the competence, capabilities, and objectivity of that expert?

b. Obtain an understanding of the work of that expert?

c. Evaluate the appropriateness of that expert’s work as audit evidence for the relevant assertion?

(ASA 500.8)


47. When designing tests of controls and tests of details, did the member determine means of selecting items for testing that are effective in meeting the purpose of the audit procedure? (ASA 500.10)


48. When designing an audit sample, did the member:

a. consider the purpose of the audit procedure and the characteristics of the population from which the sample will be drawn? (ASA 530.6)

b. determine a sample size sufficient to reduce sampling risk to an acceptably low level? (ASA 530.7)

c. select items for the sample in such a way that each sampling unit in the population has a chance of selection? (ASA 530.8)


If answered ‘Yes’, please refer to ‘Other Procedures: External Confirmations’

49. Has the member obtained sufficient appropriate audit evidence to reduce audit risk to an acceptably low level and thereby enable the member to draw reasonable conclusions on which to base their opinion? (ASA 200.17)


50. Has the member obtained sufficient appropriate evidence on which to base the conclusion expressed in the compliance report? (ASAE 3000.64-65 and ASAE 3100.51 and 75)

Note: If answered ‘No’ to the above, the member is in breach of ASAE 3000.64-65 and ASAE 3100.51 and 75.


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Audit Plan and Procedures: Accounting Estimates

51. When the member identified accounting estimates as having high estimation uncertainty, has the member determined the appropriate responses to address the risk of material misstatement associated with accounting estimates? (ASA 540.12-14)


52. Has the member included in their audit documentation:

a. The basis for the member’s conclusions about the reasonableness of accounting estimates and their disclosure that give rise to significant risks;

b. Indicators of possible management bias, if any? (ASA 540.23)


Audit Plan and Procedures: Audit Documentation

53. Has the member prepared audit documentation on a timely basis that is sufficient and appropriate to provide basis for the member’s conclusion and evidence that the engagement performed was in accordance with the relevant standards? (ASA 230.7; ASAE 3000.79; and ASAE 3100.72)

Note: If answered ‘No’ to the above, the member is in breach of ASA 230.7; ASAE 3000.79; and ASAE 3100.72.

54. Has the member prepared audit documentation that is sufficient to enable an experienced auditor enable an experienced auditor, having no previous connection with the audit, to understand:

a. The nature, timing, and extent of the audit procedures performed to comply with the Australian Auditing Standards and applicable legal and regulatory requirements;

b. The results of the audit procedures performed, and the audit evidence obtained; and

c. Significant matters arising during the audit, the conclusions reached thereon, and significant professional judgements made in reaching those conclusions?

(ASA 230.8)


55. In documenting the nature, timing, and extent of audit procedures performed, has the member recorded:

a. the identifying characteristics of the specific items or matters tested

b. who performed the audit work and the date such work was completed; and

c. who reviewed the audit work performed and the date and extent of such review?

(ASA 230.9)


56. Has the member documented discussions of significant matters with trustees, those charged with governance, and others, including the nature of the significant matters discussed and when and whom the discussion took place? (ASA 230.10)



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57. When information has been identified that is inconsistent with the member’s final conclusion regarding a significant matter, has the member documented how the inconsistency was addressed? (ASA 230.11)



COMMENTS

58. During the course of the audit, is there any evidence that:

• the member identified any misstatements?

• the member used the work of an expert?

• the client used a service organisation?

If the answer was ‘Yes’ to one of the above questions, please refer to relevant questions in the ‘Other Procedures’


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AUDIT COMPLETION AND OTHER PROCEDURES

Audit Completion: Subsequent Events

59. Has the member performed audit procedures to obtain sufficient appropriate audit evidence that all events occurring between the date of the financial report and the date of the auditor’s report that require adjustment of, or disclosure in, the financial/compliance report have been identified? (ASA 560.6)


60. Has the member considered the effect on the fund’s compliance with SIS Act and SIS Regulations and the compliance report of events up to the date of the compliance report? (ASAE 3000.61; and ASAE 3100.70)


Audit Completion: Going Concern

61. Based on the audit evidence obtained, has the member concluded whether, in the member’s judgement, a material uncertainty exists relates to events or conditions that, individually or collectively, may cast significant doubt on the fund’s ability to continue as a going concern? (ASA 570.18)


Audit Completion: Communicating Deficiencies in Internal Control to the Trustees/Those Charged with Governance

62. Has the member communicated in writing any significant deficiencies in internal controls identified during the audit to those charged with governance and, where appropriate, to trustees, on a timely basis? (ASA 265.9-10)


Audit Completion: Written Representation

63. Has the member obtained written representations from the trustees? (ASA 580.9; ASAE 3000.56-60; and ASAE 3100.58)

Note: If answered ‘No’ to the above, the member is in breach of ASA 580.9; ASAE 3000.56-60; and ASAE 3100.58.


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64. Has the member requested the trustees to provide written representation that:

a. they have fulfilled their responsibility for the preparation of the financial report in accordance with the applicable financial reporting framework, including where relevant the fair presentation, as set out in the terms of the audit engagement? (ASA 580.10)

b. they have provided the member with all relevant information and access as agreed in the terms of the audit engagement and all transactions have been recorded and are reflected in the financial report? (ASA 580.11)

c. i. they acknowledge their responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud (ASA 240.39a)

ii. they have disclosed to the member the results of the trustees’ assessment of the risk that the financial report may be materially misstated as a result of fraud (ASA 240.39b)

iii. they have disclosed to the member their knowledge of fraud or suspected fraud affecting the entity (ASA 240.39c and 39d)

d. all known instances of non-compliance or suspected non-compliance with laws and regulations whose effects should be considered when preparing the financial report have been disclosed to the member (ASA 250.16)

e. they believe the effects of uncorrected misstatements are immaterial, individually and in aggregate, to the financial report as a whole (ASA 450.14)

f. all known actual or possible litigation and claims whose effects should be considered when preparing the financial report have been disclosed to the member and accounted for and disclosed in accordance with the applicable financial reporting framework (ASA 502.6)

g. they believe significant assumptions used in making accounting estimates are reasonable (ASA 540.22)

h. where the applicable financial reporting framework establishes related party requirements, they have disclosed to the member the identity of the entity’s related parties and all the related party relationships and transactions of which they are aware and they have appropriately accounted for and disclosed such relationships and transactions in accordance with the requirements of the framework (ASA 550.26)

i. all events occurring subsequent to the date of the financial report and for which the applicable financial reporting framework requires adjustment or disclosure have been adjusted or disclosed (ASA 560.9)

j. they have assessed the entity’s ability to continue as a going concern (ASA 570.16e)

k. they have kept accounting statements on file for at least five years (s35AE and s35B of SIS Act)

l. they have kept any minutes and records on file for at least 10 years (s103, S104A, and s105 of SIS Act)

m. they are not disqualified persons (s126K of SIS Act)

n. their assets are valued at market value in the fund’s accounts (r 8.02B of SIS Regulation)

o. they have not recognised, or in any way encouraged, or sanctioned an assignment of members’ superannuation interests and a charge over, or in relation to the member’s benefits? (r 13.12 and r 13.13 of the SIS Regulation);

p. they have not given a charge over, or in relation to an asset of the fund? (r 13.14 of SIS Regulation)

Note: If answered ‘No’ to the above, the member is in breach. Please identify the relevant ASA and/or ASAE 3100.58 (if relating to SISA or SISR) that the member has breached in the proceeding comment box.

COMMENTS

65. a. Has the member obtained the written representation that was dated as near as practicable to, but not after, the date of the auditor’s report on the financial report?

b. Has the member obtained the written representation that is for all the financial report(s) and period(s) referred to in the auditor’s report? (ASA 580.14)


Audit Completion: Comparative Information

66. Has the member determined whether the financial report includes the comparative information required by the applicable financial reporting framework and whether such information is appropriately classified? (ASA 710.7)



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Audit Completion: Audit Report

67. Has the member issued the auditor’s report in writing? (ASA 700.20; ASAE 3000.67; and ASAE 3100.78)

Note: If answered ‘No’ to the above, the member is in breach of ASA 700.20; ASAE 3000.67; and ASAE 3100.78.

68. Has the auditor’s report been signed by the member? (ASA 700.47)


69. Has the auditor’s report named the location in the jurisdiction where the member practices? (ASA 700.48)


70. Has the auditor’s report been dated no earlier than the date on which the member has obtained sufficient appropriate audit evidence on which to base the member’s opinion on the financial report? (ASA 700.49)


71. If the member is required by law or regulation of a specific jurisdiction to use a specific layout or wording of the auditor’s report (in this case by Australian Taxation Office) and the member’s report refer to Australian Auditing and Assurance Engagement Standards, has the member used the latest approved form of report? (ASA 700.50; ASAE 3000.71; ASAE 3100.80)

Note: If answered ‘No’ to the above, the member is in breach of ASA 700.50; ASAE 3000.71; ASAE 3100.80.

72. Did the member modify the opinion in the auditor’s report when:

a. the member concluded that, based on the audit evidence obtained, the financial report as a whole was not free from material misstatement; or

b. the member was unable to obtain sufficient appropriate audit evidence to conclude that the financial report as a whole was free from material misstatement?

(ASA 705.6)


73. a. When the member modified the opinion, has the member use the heading ‘Qualified Opinion’, ‘Adverse Opinion’, or ‘Disclaimer of Opinion’, as appropriate, for the Opinion section? (ASA 705.16)

b. When the member identified a matter that gave rise to a qualified, adverse, or a disclaimer, has the member considered to separately report these matters to the trustees? (ASAE 3100.87)

Note: If answered ‘No’ to the above, the member is in breach of ASA 705.16 and/or ASAE 3100.87.

74. When the member considered it necessary to draw users’ attention to a matter presented or disclosed in the financial report that was of such fundamental importance to users’ understanding of the financial report but such matter would not result in the modification of the member’s opinion and had not been determined to be a key audit matter to be communicated in the audtior’s report, did the member include an Emphasis of Matter paragraph in the auditor’s report? (ASA 706.8)



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75. If the prior period financial report was not audited, has the member stated in an Other Matter paragraph in the auditor’s report that the corresponding figures and/or the comparative financial report are unaudited? (ASA 710.14 and 19)

Note: If answered ‘No’ to the above, the member is in breach of ASA 710.14 and 19.

76. If the financial report of the prior period was audited by a predecessor auditor and the member was not prohibited by law or regulation from referring to the predecessor auditor’s report on the corresponding figures and decided to do so, did the member, in addition to expressing an opinion on the current period’s financial report, state in an Other Matter paragraph:

a. That the financial statements of the prior period were audited by the predecessor auditor;

b. The type of opinion expressed by the predecessor auditor and, if the opinion was modified, the reasons therefore; and

c. The date of that report?

(ASA 710.13 and ASA 710.17)

Note: If answered ‘No’ to the above, the member is in breach of ASA 710.13 and ASA 710.17.

77. Does the auditors’ report that the member issued on the special purpose financial report include an Emphasis of Matter paragraph, under an appropriate heading, alerting users of the auditor’s report that the financial report has been prepared in accordance with a special purpose framework and that, as a result, the financial report may not be suitable for another purpose? (ASA 800.14)



COMMENTS

Audit Completion: Member’s representation in the audit report

78. Has the member represented compliance with Australian Auditing Standards in the member’s audit report in cases where he/she has not complied with ALL of the Australian Auditing Standards relevant to the audit? (ASA200.20)

Note: If answered ‘Yes’ to the above, the member is in breach of ASA200.20.

Audit Completion: Communication with those charged with governance

79. Has the member communicated significant findings from the audit to those charged with governance? (ASA 260.16)



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80. Where matters required to be communicated were communicated orally, did the member include them in the audit documentation, including when and to whom they were communicated? Where matters required to be communicated were communicated in writing, did the member retain a copy of the communication as part of the audit documentation? (ASA 260.23)


81. Has the member evaluated, individually and in aggregate, whether deficiencies and/or compliance breaches that have come to their attention are material and made the trustees aware as soon as possible? (ASAE 3100.64 and 68)

Note: If answered ‘No’ to the above, the member is in breach of ASAE 3100.64 and 68.

82. Has the member considered:

a. other reporting responsibilities as specified in the terms of the engagement? (ASAE 3100.88)

b. other reporting obligations set by regulators, legislators, and statutory bodies? (ASAE 3100.89)

Note: If answered ‘No’ to the above, the member is in breach of ASAE 3100.88 and/or ASAE 3100.89.


COMMENTS

Other Procedures: External Confirmations

83. When using external confirmation procedures, has the member maintained control over external confirmation requests? (ASA 505.7)


84. In the case of each non-response, has the member performed alternative audit procedures to obtain relevant and reliable audit evidence? (ASA 505.12)


Other Procedures: Evaluation of Misstatements Identified during the Audit

85. Where the trustees refused to correct some or all of the misstatements communicated by the member, did the member obtain an understanding of their reasons for not making the corrections and take that understanding into account when evaluating whether the financial report as a whole is free from material misstatement? (ASA 450.9)



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86. Has the member determined whether such uncorrected misstatements were material, individually or in aggregate? (ASA 450.11)


87. Has the member included in the audit documentation:

a. the amount below which misstatement would be regarded as clearly trivial?

b. all misstatement accumulated during the audit and whether they have been corrected?

c. the member’s conclusion as to whether uncorrected misstatements are material, individually or in aggregate, and the basis for that conclusion? (ASA 450.15)


Other Procedures: Using the work of an Auditor’s Expert

88. If the member has used an expert, has the member evaluated:

a. whether the expert has the necessary competence, capabilities and objectivity for the member’s purposes?

b. the adequacy of the expert’s work for the member’s purposes?

(ASA 620.9, ASA 620.12, ASAE 3000.52-54, and ASAE 3100.62)

Note: If answered ‘No’ to the above, the member is in breach of ASA 620.9 and 12; ASAE 3000.52-54; ASAE 3100.62.

89. Has the member included in the audit documentation the nature and scope of and conclusions resulting from consultations undertaken during the course of the audit engagement? (ASA 220.24(d))

Note: If answered ‘No’ to the above, the member is in breach of ASA 220.24(d).

Other Procedures: Auditing Considerations Relating to an Entity Using a Service Organisation

90. Has the member obtained an understanding of the services provided by a service organization to the trustees, and has the member evaluated the design and implementation of the trustees’ internal control relating to these services? (ASA 402.9-10)

For example if the fund has invested in a managed investment platform, has the member obtained an understanding over the investment manager’s internal control and a copy of the fund’s audit report?



COMMENTS


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SIS ACT AND REGULATION REQUIREMENTS

1. Is there any evidence on file to support the member’s conclusion on the fund/trustee’s compliance with the relevant provisions of the SIS Act and the SIS Regulation (refer to Appendix) required by the Australian Taxation Office (ATO)?

Note: If answered ‘No’ to the above, the member is in breach of ASAE 3100.51.

2. Has the member met, or likely to meet, the competency requirements as an approved SMSF auditor?

Based on the joint accounting bodies, the competency requirements are at least 30 hours of relevant professional development activity in each rolling 3 year period, comprising the following as a minimum for each category, with the balance being made up from any of these categories as necessary:

• 8 hours of superannuation training – which need not deal only with the audits of SMSFs

• 8 hours of financial statement or compliance audit training

• 4 hours of financial accounting training

A maximum one third of the minimum 30 hours required may be unstructured. (CPA By Law 4.6, s128F and s128Q of the SIS Act)

Note: If answered ‘No’ to the above, the member is in breach of CPA By Law 4.6; s128F and s128Q of the SIS Act.

3. Has the member, within 30 days after the end of:

a. the 12 month period beginning on the day of the auditor’s registration as an approved SMSF auditor took effect; and

b. each subsequent 12 month period;

given to the Regulator an annual statement, in the approved form, relating to that period? (s128G of the SIS Act)

Note: If answered ‘No’ to the above, the member is in breach of s128G of SIS Act.

4. Has the member immediately after forming the auditor opinion:

a. Told the trustee about any contravention of the SIS Act / Regulations or any significant matter that may have occurred, may be occurring, or may occur; and

b. Told the Regulator about the contravention of the SIS Act / Regulations or any significant matter in the approved form?

(s129 of the SIS Act)

Note: If answered ‘No’ to the above, the member is in breach of s129 of SIS Act.

5. Did the member:

a. evaluate the solvency or the financial position of the fund?

b. report in writing any relevant information including identified breaches to the Regulator?

(s130 and s130A of the SIS Act; r9.03 and r9.04 of SIS Regulation)

Note: If answered ‘No’ to the above, the member is in breach of s130 and s130A of the SIS Act; r9.03 and r9.04 of SIS Regulation.


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6. If the member is aware of any circumstances that amount to an attempt, in relation to an audit of the SMSF, by any person to unduly influence, coerce, manipulate, or mislead the member or the audit team conducting the audit; or an attempt by any person to otherwise interfere with the proper conduct of the audit, has the member notify the Regulator in writing of those circumstances as soon as possible, and in any case within 28 days? (s130BA of the SIS Act)

Note: If answered ‘No’ to the above, the member is in breach of s130BA of SIS Act


COMMENTS


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OVERALL FINDINGSBREACHES OF MANDATORY REQUIREMENTS IDENTIFIED

POSITIVE FEEDBACK TO BE CONVEYED TO THE MEMBER(S) IN THE REVIEWER’S SUMMARY – OTHER MATTERS REPORT

DEFICIENCIES IN THE QUALITY CONTROL SYSTEM THAT WILL BE NOTED IN THE REVIEWER’S SUMMARY – OTHER MATTERS REPORT WITH SUGGESTIONS FOR IMPROVEMENT


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APPENDIX – SIS ACT AND REGULATIONS SECTIONS

SECTION OR REGULATION

MINIMUM EXPECTATION OF AUDIT CHECK

s17A The auditor should obtain evidence that the fund meets the definition of an SMSF by checking:

• the trust deed

• current number and names of members

• type of trustee

• relationships between members (eg relatives or not employees)

• names of individual trustees or directors of corporate trustee

• details of legal personal representatives where relevant.

s35AE The auditor should obtain evidence that accounting records are in writing in English by:

• sighting the written accounting records relevant to the year under audit

• seeking written confirmation from trustees that these accounting records are kept on file for at least five years (in trustee representation letter).

s35B The auditor should obtain evidence that accounting statements are prepared, signed by at least two of the individual trustees or two directors of the corporate trustee and kept for at least five years by:

• sighting the accounting statements

• seeking written confirmation from trustees that accounting statements are kept on file for at least five years (in trustee representation letter).

s35C(2) The auditor should document any requests made for information and the amount of time before they receive a response, if a response is received at all.

When requesting documents, the auditor should remind trustees of the importance of providing documents in the required timeframe, because failure to do so is a reportable contravention.

s52B(2)(d) and Reg 4.09A

The auditor should obtain evidence that the fund’s money and assets are held separately by:

• sighting asset ownership documents, including bank statements, to verify SMSF assets are held in the name of trustees on behalf of the fund (eg R & J Smith as trustees for the Smith SMSF or R Smith Pty Ltd as trustee for Smith SMSF) and not in the name of the trustees alone

• where State law prevents ownership in the SMSF’s name, checking for alternative documentation that protects the fund’s assets (eg declaration of trust)

• reviewing transactions on bank statements to ensure fund money is not mixed with money belonging to related parties of the SMSF.

Where there has been a change in trustees, the auditor should obtain evidence that ownership documents reflect the change.

s62 The auditor should:

• check that the trust deed established the fund solely for the provision of retirement benefits for fund members and their dependants in the case of the member’s death before retirement

• consider transactions to ensure they have been entered into with the sole purpose of providing benefits to members in retirement and not to provide a current day benefit before a condition of release has been met.

• indicators that a fund might not be might not be meeting the sole purpose test could include investments acquired or contracts entered into that appear to provide minimal returns for the fund, or investments where members are able to presently use or benefit from an asset or receive some additional personal benefit from the investment (for example the fund invests in a sports club that provides members with free use of facilities). Another indicator would be if the fund is running an active business.

s65 The auditor should obtain evidence that the fund has not lent money or provided financial assistance to members and relatives by:

• examining bank statements for any transfers of money to members or relatives and seeking explanation from trustees for any unusual transactions

• checking details of all loans by the fund (including parties to the loan, loan term, interest, repayments)

• checking any transactions with related parties for financial assistance to members or relatives

• reviewing asset ownership to ensure that a charge or other form of security has not been taken over any of the SMSF’s assets to secure a member’s or relative’s borrowing. If the auditor has reason to suspect this may be happening, they should consider further checks, such as

– property title search to check for encumbrances on real property

– the Personal Property Securities Register for other parties registering interests against other SMSF assets.


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s66 The auditor should check whether the fund has acquired any assets from related parties by identifying the parties involved in fund acquisitions. Obtain evidence of the parties to acquisitions including sighting minutes of meetings regarding the purchase, invoices or contracts of sale.

If there is a related party acquisition, the auditor should check whether it is:

• an excepted acquisition

• acquired at market value.

s67, s67A, s67B The auditor should check whether the fund has any borrowings by examining financial statements, documents and bank statements, checking for overdrafts, loans or unusual transactions.

If there is a borrowing, the auditor should:

• seek explanation from the trustees

• check the reason for the borrowing

• determine whether it is allowed under the borrowing rules

• examine the trust deed to determine if the fund is permitted to borrow.

If the fund appears to have a limited recourse borrowing arrangement under section 67A the auditor should check:

• that the trust deed and the investment strategy allow for limited recourse borrowing arrangements

• the loan documents to ensure there is limited recourse available to the lender

• the deed of the bare trust

• that the asset is a type that can be acquired by the fund.

If there is a replacement asset the auditor should check that it is allowed to be treated as an acquirable asset under section 67B.

s82 The auditor should first determine if there are related party investments by:

• sighting financial statements, bank statements and any other relevant supporting documents such as share and unit certificates, loan and lease documents

• checking related entity financials etc, the proportion of shares/units held in the related entity and whether SMSF trustees or related parties hold a controlling interest or can significantly influence decisions of the entity (for example majority shareholding, directors or voting interest).

If there are related party investments, the auditor should check if:

• any related party investments or assets meet the definition of in-house assets (loans to, investments in and leases to related parties)

• any in-house asset exceptions apply.

If there are in-house assets, the auditor should calculate the market value ratio of the in-house assets. If the ratio exceeds 5% the auditor should sight the written plan the trustees have to dispose of the in-house assets to reduce the ratio to less than 5%.

s83 The auditor should check whether the fund made any acquisitions during the year.

If there were acquisitions the auditor should obtain evidence of the identity of the parties that the fund acquired assets from to determine if any of the assets acquired were in-house assets by:

• sighting financial statements, bank statements and any other relevant supporting documents such as share and unit certificates, loan documents or lease documents to check for related party investments

• checking the proportion of shares/units held in the related entity and whether SMSF trustees or related parties hold a controlling interest or can significantly influence decisions of the entity (eg majority shareholding, directors or voting interest).

If there were acquisitions of in-house assets, the auditor should obtain evidence to determine whether the acquisition of the asset occurred at a time when the market value ratio of in-house assets was in excess of 5% or whether the acquisition caused the market ratio of the in-house assets to exceed 5%.

s84 Where a fund has in-house assets, the auditor should obtain evidence that the trustees have taken all reasonable steps to comply with in-house asset rules by checking that the trustees:

• ensured market value of in-house assets did not exceed 5% of total fund assets

• did not intentionally acquire in-house assets which caused the in-house percentage to be exceeded

• made a written plan to dispose of excess in-house assets where the market value ratio of in-house assets exceeded 5%.

The auditor should consider checking that trustees have documented their plans with regard to in-house transactions by sighting:

• relevant minutes of trustee meetings

• the fund’s investment strategy.

Where the SMSF invests in related parties, the auditor should check the operation of the related entity by sighting:

• financial statements to see if the other entity has borrowed, its dealings are at arm’s lengths, and distributions are paid as they fall due.


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s85 When examining fund transactions, the auditor should check for schemes designed to circumvent in-house asset rules by:

• sighting bank statements and relevant supporting documents for transactions

• considering the relationship between the fund and the parties to the transactions

• checking that trustees have not entered into transactions through third parties that were designed to ultimately benefit a related party of the fund.

The auditor should also check that the trustees have:

• not artificially reduced the fund’s in-house asset ratio by undervaluing in-house assets and over-valuing other fund assets.

s103 The auditor should obtain evidence that minutes and decisions are documented and kept on file as required by:

• sighting meeting minutes and records of decisions relevant to the year under audit

• seeking written confirmation from trustees that these minutes and records are kept on file for at least 10 years (in trustee representation letter).

s104 The auditor should obtain evidence that records of all trustee or director of corporate trustee changes and trustee consents have been retained by:

• sighting records of trustee changes and consents relevant to the year under audit

• seeking written confirmation from trustees that these records are kept on file for at least 10 years (in trustee representation letter).

s104A The auditor should obtain evidence that that all trustee declarations have been retained as required by:

• sighting a signed trustee declaration for each individual SMSF trustee or each director of the corporate trustee relevant to the year under audit

• seeking written confirmation from trustees that the trustee declarations are kept on file for at least 10 years (in trustee representation letter).

Signing the trustee declaration applies to new trustees and directors from 30 June 2007 and trustees who have undertaken an education course in compliance with an education direction.

s105 The auditor should obtain evidence that the fund has retained all member or beneficiary reports as required by:

• sighting any member or beneficiary reports relevant to the year under audit

• seeking written confirmation from trustees that the reports are kept on file for at least 10 years (in trustee representation letter).

s109 The auditor should obtain evidence that the fund’s transactions are conducted at arm’s length (particularly where there are dealings with a related party of the fund) by examining:

• financial statements and source documents

• bank statements

• supporting documents of transactions, such as leases, loan documents or purchase contracts to check for commercial terms and a market rate of return.

s126K The auditor should obtain evidence that no trustee or director of a corporate trustee is a disqualified person by:

• seeking written confirmation from trustees that they are not disqualified persons (in trustee representation letter).

The auditor may consider further checks in some cases, for example, if the trustees refuse to provide written confirmation or there is reason to suspect they may be disqualified.

Additional checks the auditor may consider include:

• company information with ASIC

• insolvency or bankruptcy check with the Australia Financial Security Authority.

Sub Reg 1.06(9A)

The auditor should obtain evidence that the fund has rules for pension payments as set out in 1.06(9A) and that the fund complies with the rules (ie payments made at least annually and minimum required payment has actually been paid to the member during the year) by examining:

• the trust deed

• bank statements for payments

• actuarial certificates, where relevant

• member records evidencing pension payments.

Reg 4.09 The auditor should obtain evidence that the trustees have a regularly reviewed investment strategy that considers risk, return, diversity, liquidity and insurance needs of their members by sighting:

• the investment strategy or if the fund does not have a documented investment strategy seeking written confirmation from trustees (in trustee representation letter) that they have an investment strategy

• the reviewed or updated investment strategy or sighting minutes of meetings where the investment strategy has been reviewed.

Check that trustees have invested in accordance with the investment strategy.

Encourage trustees to document their investment strategy and its review.


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Reg 5.03 The auditor should obtain evidence that the investment return from reserves is allocated to each member’s account in a fair and reasonable way by:

• checking details of the reserve account

• sighting the member records and accounts.

Reg 5.08 The auditor should obtain evidence that minimum benefits have been maintained appropriately by:

• sighting bank statements for payments

• sighting member accounts and records that evidence pension payments

• checking whether members receiving payments have met a condition of release.

Reg 6.17 The auditor should obtain evidence that any payments were cashed, rolled over or allotted in accordance with the SISA rules.

If there are members receiving payments, the auditor should obtain evidence that the payments were only paid to members who were eligible to receive those payments under the super law and the trust deed (based on age, cessation of employment, death, terminal medical condition, temporary or permanent incapacity, compassionate grounds, hardship, or transition-to-retirement).

Reg 7.04 The auditor should test that trustees were able to accept contributions by checking:

• members’ ages and employment status

• the type and source of contributions

• timing and amount of contributions

• that the member’s TFN was quoted to the trustee within 30 days of receiving the contribution

• that no single contribution exceeded the fund-capped contribution limit for a member during the year.

If a contribution was accepted that was inconsistent with the requirements of Reg 7.04, the auditor should check that the contribution or the excess amount above the cap was refunded within 30 days of the trustees becoming aware of it.

Reg 8.02B The auditor should determine how the trustees have valued assets and obtain evidence that assets are valued at market value in the fund’s accounts and statements by:

• checking the notes to the accounts or asking trustees to confirm in a trustee representation letter when and how (what method of valuation) they valued assets

• sighting any supporting documentation verifying market value of an asset.

Reg 13.12 The auditor should obtain evidence that trustees have not recognised, encouraged or sanctioned an assignment of a member’s super interest by seeking written confirmation from trustees that they have not (in trustee representation letter).

If the auditor has reason to suspect this may be happening, they should consider further checks, such as:

• property title search to check for encumbrances on real property

• the Personal Property Securities Register for other parties registering interests against other SMSF assets.

Reg 13.13 The auditor should obtain evidence that trustees have not recognised, a charge over or in relation to a member’s benefit by seeking written confirmation from trustees that they have not (in trustee representation letter).




Reg 13.14 The auditor should obtain evidence that trustees have not given a charge over or in relation to a fund asset by seeking written confirmation from trustees that they have not (in trustee representation letter).




Reg 13.18AA The auditor should obtain evidence that the collectables and personal use assets rules have been met by sighting:

• insurance documents to check that assets were insured within seven days of acquisition

• written records of the decision for storage of collectable and personal use assets.

If the collectable or personal use asset is leased, the auditor should obtain evidence that the rules have been met by:

• sighting lease agreements for terms and conditions to determine if lessees are related parties of the SMSF.

If the collectable or personal use asset is sold, the auditor should obtain evidence that the rules have been met by:

• sighting a valuation by an independent qualified valuer

• checking whether the asset was transferred at market value as determined by the valuer.


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