ASIC SMSF Auditor Competency Exam cheat sheet

An approved SMSF auditor must be registered with ASIC; registration is separate from holding an accounting or audit qualification, and the SMSF Auditor Register is publicly searchable by name and registration number.

Eligibility for registration requires a tertiary qualification, membership of a recognised professional body, completion of an ASIC-approved SMSF audit competency course, and a minimum level of practical experience in auditing superannuation entities.

Continuing professional education is a condition of registration: auditors must complete at least 30 hours of CPD per triennium, with a specified minimum relating to superannuation or SMSF auditing.

Registration may be suspended or cancelled for failing to maintain competency, failing to comply with conditions, providing false information, or being disqualified; ASIC publishes disciplinary outcomes on its register.

Independence is a statutory condition: an auditor is ineligible to audit a fund if they are a member or trustee of the fund, an employer or employee of a trustee, or otherwise in a relationship that compromises objectivity.

A person who is an undischarged bankrupt, has been convicted of an offence involving dishonesty, or is disqualified from managing corporations is generally ineligible for registration as an SMSF auditor.

The auditor's report must be addressed to the trustees and state whether the financial statements comply with accounting standards and whether the fund's operations comply with the SIS Act and regulations.

Auditors must notify ASIC of certain prescribed events, including changes to registration details and circumstances affecting eligibility, within the timeframe specified in the registration conditions.

An approved auditor must hold professional indemnity insurance and retain audit working papers sufficient to support the opinion for the statutory retention period, generally five years.

The audit opinion covers two limbs: the financial statements (compliance with accounting standards and the SIS Act) and the fund's operations (compliance with the SIS Act and regulations during the income year).

The in-house asset test requires that in-house assets not exceed 5% of total fund assets at year end; an excess must be reported to ASIC and a written plan to rectify prepared and implemented.

The sole purpose test requires the fund to be maintained for the sole purpose of providing retirement benefits to members, or benefits to dependants on death, or both; any collateral purpose is a contravention.

Arm's-length dealing rules require investments between the fund and a related party to be made and maintained on arm's-length terms; non-arm's-length income is taxed at 45% and may breach the SIS Act.

Contribution caps (concessional and non-concessional) and the contribution acceptance rules must be tested; excess concessional contributions are included in the member's assessable income with an offset, and excess non-concessional amounts may be released.

The fund must have a documented investment strategy, reviewed regularly, considering risk, diversification, liquidity, and the ability to discharge member liabilities; the auditor assesses whether the strategy exists and is reviewed.

Minimum standards for benefits require preservation rules to be met; the auditor checks that benefits paid were permitted on an approved condition of release and that preservation components were correctly applied.

The auditor tests the valuation of assets, especially unlisted and related-party assets, for compliance with the valuation requirements; market value must be used for reporting purposes.

The fund must lodge an annual return and obtain an audit report before lodgment; the auditor must report contraventions to ASIC where required and consider whether the fund is a complying superannuation fund.