They must gather appropriate evidence to support assertions for material account balances and transactions in signed financial statements including evidence that assets are valued at market value and any income derived or expenses incurred by the fund are at arm's length.

Testing must be conducted on the assertions made in the signed financial reports about the existence of assets, entitlements and liabilities occurrence of transactions, and completeness of transactions.

It must also be conducted on events and assets being recorded, ownership, rights and obligations the SMSF has for assets, entitlements and liabilities accuracy, valuation of data amounts recorded, and classification of relevant events to correct accounts.

A review must be made of the fund's tax calculation and allocation of any tax expense or benefit to the member's accounts including checking whether the fund has correctly classified income. For example, the fund must correctly report income as ordinary, statutory, exempt current pension income or arm's length/non-arm's length income.

A review should also be made to check the accuracy of any deductions claimed, any imputation credits, carried forward losses and other offsets attributable to the fund, and whether it has correctly classified the tax status of contributions, and complied with regulatory laws that may otherwise impact its ability to claim concessional taxation treatment.

The auditor has to document their conclusions, opinions and judgments based on the evidence obtained and there should be sufficient audit working papers to allow another auditor who has had no previous involvement with the audit to understand the work performed and the opinion reached.

Finally, the auditor has to form an opinion about the fair presentation of the financial report based on evidence gathered and checks performed and this should be reported in the approved self-managed superannuation fund independent auditor's report.

The regulator stated that SMSFs are selected for audit or review based on numerous risk factors including whether an Auditor Contravention Report (ACR) has been lodged for the fund.

It said it would not generally select a fund for an audit or review based solely on a Part A qualification, stating that if a fund with a Part A qualification was selected for an audit or review based on other risk factors, it would investigate the Part A qualification further.

Where SMSF trustees receive a qualified IAR, they should work to rectify any issues as soon as possible. The trustees can also make a voluntary disclosure to the ATO.

If an audit or review is commenced, the disclosure will be taken into account in determining any enforcement action and the appropriate level of remission of administrative penalties.