There are a variety of reasons for this, not least of which is that SMSF auditors must prove that their university accounting degree includes a course of study in auditing.

Some SMSF auditors have struggled to obtain this information due to the passage of time since they left university. Some do not have a university degree but have a TAFE-equivalent qualification and others have simply given up trying to meet the requirements.

As at May 2013, ASIC had registered 3,029 approved SMSF auditors from over 5,268 SMSF auditor registration applications received. A reduction in number of SMSF auditors is anticipated to place additional demand on approved SMSF auditors and, as a result, we have seen the emergence of a number of new SMSF audit firms into the industry.

Now, for the very first time, there will be many accountants and financial planners placed in the position of having to outsource their SMSF audits.

A new professional association will have an impact on any practice. It is important to ensure that service providers are aligned with the firm’s culture, values, management, staff, clients and operations.

There are many issues to consider when choosing a SMSF auditor. While the most common question will be in relation to price, it is definitely not the most important. The following checklist has been designed to help practitioners assess and select the right SMSF auditor:

-Is your SMSF auditor registered with ASIC? Individuals are registered with ASIC, not the firm.

-Does the firm’s website show the names of their approved auditors? Do you know who you are dealing with? Is the person on ASIC’s banned and disqualified SMSF auditor list?

-Are you outsourcing audits to a SMSF audit firm who will then outsource your SMSF audits to another firm? Do your research on the firm you intend using. How long have they been operating? Who are the directors/principals? Do they have a good reputation?

-Will your SMSF audits be processed offshore? There is an obligation under APES 110 to inform clients if their work is not processed in Australia. This responsibility should be addressed in the initial terms of engagement letter between the client and the accountant. Will you have to reissue a terms of engagement letter to your client?

-Do you have to email your documents to the firm? Does the firm have systems in place to ensure your information remains confidential?

-Does the SMSF audit firm provide access to an audit portal or client portal? Do you know in which country your client’s confidential information is being held or transited through?

-How secure is the portal? What platform is used to receive and store documents? Cloud-based systems have been hacked several times over the past couple of years - is your client’s sensitive financial information secure?

-Does the firm have an outsourcing agreement? The agreement should set out the firm’s approach to providing their services and should be developed in accordance with APES 11, APES 320 & APES 325.

-Will they provide an SMSF audit checklist? Do you know what documents are required for the audit?

-Is there a record of documents already provided and/or uploaded to the portal? This can save a lot of time and discussion between parties if there is a breakdown in the audit process.

-What is the turnaround time to complete work? Are they proactive or reactive to your practice’s workflow requirements?

-What is the turnaround time during peak periods? Will you miss your lodgement deadline?

-When you provide fund documents, are you emailed back a signed audit report immediately? As there will almost always be additional documents required for the audit, this may indicate that the audit is not being undertaken in line with professional standards and legislation.

-Are management letters provided? Best practice is that a management letter is always provided, even if there are no additional comments addressed to the trustees.

-Do they provide SMSF technical advice and assistance? Does the firm provide SMSF advice that will assist in rectifying breaches? Do you have to pay extra for this service?

-Is the firm a dedicated SMSF audit firm? Do they provide any other services? Will independence be an issue?

-Are property title searches undertaken annually? This confirms that the trustees have been correctly registered on the title and also ensures that there are no mortgages or encumbrances on the property.

-Are bank audit certificates obtained? What if the cash component is material? Once again, confirmation of correct title ownership is important, which may not be shown by the bank statements alone. Confirmation can also highlight other issues, such as whether there is an encumbrance or lien on the investment.

The thought of having to select a new SMSF auditor for any practitioner can be overwhelming. The relationship between the SMSF auditor and accountant is a unique one that has to be built on mutual respect and professional trust.

This checklist is provided as a starting point only, to which you can add your own list of customised questions to complete your due diligence. Then you will be able to make an informed choice and select the SMSF audit firm that is right for you.

Shelley Banton is a director at Super Auditors.