Checking wind-up requirements
As a self-managed super fund (SMSF) auditor, there are extra audit checks you need to consider when undertaking the final SMSF audit for a fund that is winding up.
These include checking that:
- any wind-up requirements in the trust deed have been met
- all members agreed to wind up in writing
- the financial statements correctly account for assets, liabilities, income, expenses and final allocations to and payments from member accounts
- no accrued income or expenses are overdue at the wind-up date apart from estimated tax accruals awaiting the SMSF’s final tax assessment
- asset disposals occurred at market value based on verifiable evidence provided by the trustees
- market value of any collectables disposed of to a related party, including as an in-specie super payment, are supported by a written valuation from a qualified independent valuer
- benefits were only paid to
- members who met a condition of release and they had provided written confirmation to the trustees
- eligible beneficiaries, or
- the legal personal representative of the member or beneficiary
- benefits were transferred to and received by a complying super fund for members who did not meet a condition of release
- where the fund's bank account remains open, for example to pay a final tax liability or receive a tax refund, you have written representation from the trustees confirming that any bank transactions occurring after the audit will comply with super laws
- bank transactions related to final tax liabilities or refunds are subsequently paid or transferred as prescribed in Part 6 of the Superannuation Industry (Supervision) Regulations 1994.
Reporting obligations
You should qualify your audit report if you either:
- find evidence of non-compliance with super laws
- haven't been provided with sufficient, appropriate audit evidence to support your opinion.
For example, if the trustees have left the SMSF's bank account open to receive the final tax refund or pay the final tax liability, your qualification should say you are unable to verify the compliance of transactions occurring after the audit date because the fund's bank account has remained open.
If the SMSF has contravened reportable provisions of super laws, you must:
- complete and lodge an Auditor/actuary contravention report
- notify the trustees in writing.
Even when there is no evidence of non-compliance, it is good practice to provide a final management letter to the trustees reminding them of their remaining obligations to formally wind up the SMSF. These include:
- lodging the final SMSF annual return
- keeping the SMSF bank account open
- to pay the final tax liability or receive a tax refund
- until they have received confirmation from us confirming that their fund has been wound up
- keeping all records required under super laws, including those specific to fund wind-up, for at least 10 years following lodgment of the final SMSF annual return.