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Is the SMSF auditor responsible for verifying and reporting on the details in the TBAR forms? Example, if the member exceeds the TBA cap. Also, I have found that the tax components in the members statements are often random with some accountants not taking it too seriously. In both cases, if the details of the TBARs and/or tax components are wrong, tax and/or penalties may arise. Are there any risks to the auditor for errors or omissions in the above?
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Hi Ron
It will be good to get other members views on the 2 issues you have raised.
The auditor is not responsible for verifying and reporting on the details of the TBAR forms. It is a difficult area as a member could have a superannuation balance in another Super Fund that the auditor is not aware of which could impact the TBAR reporting. The engagement letter & trustee representation letter should refer to the Trustees being responsible for the TBAR reporting.
In relation to the member statements the audit report re Part A states that the auditor has audited the:
"special purpose financial report comprising the Statement of Financial Position as at 30 June 2020, the Operating Statement for the year then ended, a summary of significant accounting policies and other explanatory notes of
the XYZ Superannuation Fund for the year ended 30 June 2020".
Based on the above the auditor has to audit the member's balances but is not auditing the details / components that are in the member statement. The auditor should review the tax free / taxable components and preserved / non preserved components as these details are very important to the members of the Fund & it would also make the auditor's role difficult if they are not properly tracked and recorded.
If the member component's are not being properly recorded this should be raised as a management letter item and rectified. As an example I am involved in a Fund at the moment where we are trying to calculate the tax free / taxable components for a Fund that started in 1993. My view is that if the auditor had not highlighted this issue in the past they could be at risk of the trustee's taking action against them.
Thanks
SMSF AAA