The 2017 SMSF audit report has moved the auditor’s opinions to the top of both Part A and Part B. Broadly they are followed by basis for opinion, SMSF trustees’ responsibilities and auditor’s responsibilities.
In the 2016 SMSF audit report, it is not always necessary to include basis of opinion in either Part A or Part B; in the 2017 SMSF audit report, basis of opinion holds permanent positions in both parts. APES 110 is added in the audit report as part of the basis of opinion in Part A. Auditor independence requirement is stressed; and the link between APES 110 and SISR is highlighted. Conducting engagement in accordance with ASAE 3100 Compliance Engagements forms basis of opinion in Part B. The latest version of ASAE 3100 is relatively new, only issued in February this year as part of the AUASB’s revision of all standards on assurance engagements that anchor to ASAE 3000.
In Part A, emphasis of matter on the basis of accounting paragraph is moved just after the basis for opinion and is unchanged; In Part B, the new heading, independence and quality control, follows the basis for opinion.
Going concern basis of accounting is added under responsibilities of both trustees and the auditor in Part A. Under trustees’ responsibilities: “the trustees are responsible for assessing the fund’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the trustees intend to wind-up the fund. The going concern basis of accounting is appropriate when it is reasonably foreseeable that the fund will be able to meet its liabilities as they fall due.” The auditor is to conclude on the appropriateness of trustees’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubts on the fund’s ability to continue as a going concern. It continues to state “If I conclude that a material uncertainty exists, I am required to draw attention in the auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of the auditor’s report. However, future events or conditions may cause the fund to cease to continue as a going concern.”
Internal control as a trustee responsibility in Part A is unchanged. In the new report, internal control is also introduced as trustee responsibility in Part B. It states “Each trustee is responsible for identifying, designing and implementing internal controls as they determine necessary to meet compliance requirements and monitor ongoing compliance.” Also new in Part A, the auditor is to communicate with trustees regarding any significant deficiencies in internal control identified during the audit. There is no such requirement for auditors in Part B.
A new paragraph, auditor’s objective, is added in Part A. It states “My objective is to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of trustees taken on the basis of this financial report.”
The audit procedures of risk assessment are expanded. The expanded version states “Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.”
Other additions in Part A are: Trustees are responsible for overseeing the fund’s financial reporting process; and auditors are to communicate with trustees, among other matters, the planned scope and timing of the audit and significant audit findings.
In Part B, the audit procedures with respect of section 62 included in the 2016 SMSF audit report are removed in the 2017 SMSF audit report. The audit procedures with respect to regulation 4.09 remain. A new paragraph is added in the auditor’s responsibility, which states “An assurance engagement to report on the fund’s compliance with the applicable requirements of the SISA and the SISR involves performing procedures to obtain evidence about the compliance activity and controls implemented to meet the compliance requirements. The procedures selected depend on my judgement, including the identification and assessment of risks of material non-compliance.”
Another addition in Part B is inherent limitation paragraph. It states: “Due to the inherent limitations of an assurance engagement, together with the internal control structure it is possible that fraud, error, or non-compliance with the listed provisions may occur and not be detected. A reasonable assurance engagement does not provide assurance on whether compliance with the listed provisions will continue in the future.”
In Part B, where the word “conclusion” is used in the 2016 report, it is changed to “opinion” in the 2017 SMSF audit report; where the word “audit” is used in 2016, it is changed to “reasonable assurance engagement”.
There are no changes to the sections and regulations the auditor reports on in Part B.
