Every SMSF must be audited every year by an approved SMSF auditor – an auditor registered with ASIC who holds an SMSF auditor number (SAN) – before the fund’s annual return is lodged, even in years with no contributions or payments. Trustees must appoint the auditor at least 45 days before the annual return is due, give them every document they request within 14 days, and the auditor must report certain breaches to the ATO via an auditor contravention report (ACR) within 28 days of completing the audit. The audit covers both the financial statements and the fund’s compliance with super law. Here is what trustees need to know, deadline by deadline.
Last reviewed June 2026. Penalty amounts use the Commonwealth penalty unit of $330, current at June 2026 – the unit is due for CPI indexation on 1 July 2026.
The Annual Audit Obligation
The audit is not optional and not risk-based – section 35C of the Superannuation Industry (Supervision) Act 1993 requires every SMSF to be audited each year. The auditor does two jobs:
- Financial audit: verifying the fund’s financial statements – that assets exist, are owned by the fund, and are reported at market value.
- Compliance audit: testing the fund against the SIS Act and Regulations – the sole purpose test, lending and borrowing rules, in-house asset limits, separation of assets, contribution and payment standards, and the documented investment strategy.
The annual return cannot be lodged until the audit is complete: the return asks for the auditor’s details, their SAN and the audit completion date. Lodging a SAR with false audit details is one of the fastest ways to attract ATO attention.
Who Can Audit an SMSF?
Only an approved SMSF auditor – a person registered with ASIC who holds a current SMSF auditor number. Your accountant cannot simply audit the fund themselves, and the independence rules have real teeth. Under the APES 110 independence standards the ATO enforces:
- An auditor cannot audit a fund where they, their staff or their firm prepared the financial statements, unless that work was purely routine or mechanical and the trustees made all the judgement calls – a narrow exception in practice. Since 1 July 2021 this has effectively ended routine in-house audits, which is why most accounting firms (Prime Partners included) coordinate with independent external auditors.
- An auditor cannot audit their own fund, a fund of relatives, close friends or business partners, or any fund where they have a financial interest.
- The auditor cannot assume any management responsibility for the fund.
Deadlines: Appointment, Documents and Lodgement
| Requirement | Deadline |
|---|---|
| Appoint your approved SMSF auditor | At least 45 days before the SMSF annual return is due |
| Provide documents the auditor requests | Within 14 days of the request |
| Auditor gives you the audit report | Within 28 days of receiving all relevant documents |
| Auditor lodges an ACR for reportable contraventions | Within 28 days of completing the audit |
| SMSF annual return – new funds and self-preparers | Generally 28 February (31 October where the ATO advises it at registration, or for self-preparing new funds) |
| SMSF annual return – established funds with a tax agent | Generally 15 May, unless the ATO advises an earlier date |
The audit sits inside the lodgement timetable, so the practical message is: get your records to your accountant early. The ATO’s SMSF auditor page sets out the appointment rules.
What Trustees Must Provide
The auditor will ask for, at a minimum:
- Signed financial statements and the trial balance
- Bank statements for every fund account, for the full year
- Investment reports, broker statements, contract notes and dividend statements
- Title documents and lease agreements for property, plus a market valuation – and evidence rent was paid at market rates
- The trust deed, any amendments, and trustee minutes for the year’s decisions
- The documented investment strategy, including evidence it was reviewed and that insurance for members was considered
- Contribution and rollover records, pension documentation and actuarial certificates where required
- For limited recourse borrowing arrangements: loan documents and evidence of arm’s-length terms
A clean, complete file is the difference between a $400 audit and a $900 one – audit time is the main driver of the fee, which is why well-administered funds pay close to the ATO-reported median of $550. Our SMSF costs guide shows where the audit sits in the total annual spend.
Auditor Contravention Reports: What Gets Reported to the ATO
If the auditor identifies a breach of the SIS Act or Regulations that meets any of the ATO’s seven reporting criteria, they must lodge an auditor contravention report – there is no materiality discretion once a test is met. The contraventions auditors report most often are depressingly consistent, and most trace back to treating the fund’s money as your own:
| Common contravention | Rule breached | How it usually happens |
|---|---|---|
| Loans or financial assistance to members | SISA s65 | “Borrowing” fund money to cover a personal or business cash shortfall, intending to repay it |
| In-house assets over the 5% limit | SISA s84-85 | Investments in, or loans/leases to, related parties exceeding 5% of fund assets |
| Failure to keep fund assets separate | SISR r4.09A | Fund money in a personal account, personal expenses paid from the fund account, assets not held in the trustee’s name as trustee |
These are consistently among the most commonly reported contravention types in the ATO’s published data. An ACR is not automatically a disaster – the ATO weighs whether the breach was rectified quickly and voluntarily – but repeated or unrectified contraventions escalate fast.
Penalties: What Non-Compliance Actually Costs
- Late annual return: failure-to-lodge penalty of one penalty unit per 28 days late, capped at five units – up to $1,650 – and it is not deductible to the fund.
- More than two weeks overdue: the ATO changes the fund’s Super Fund Lookup status to “Regulation details removed”, which blocks employer contributions and rollovers until the return is lodged.
- Administrative penalties: set numbers of penalty units per breach under SISA s166 – for example, lending to a member is 60 penalty units, which is $19,800 at the current $330 unit. Critically, the penalty applies to each individual trustee personally but only once to a corporate trustee, and it cannot be paid from fund money.
- Escalation: education and rectification directions, enforceable undertakings, trustee disqualification, and in serious cases the fund being made non-complying – which taxes the fund’s assets at the top rates and is usually terminal.
Making Audit Season Boring (the Goal)
A good audit year is one where nothing happens: records were complete, assets were valued, minutes were signed, and no one touched fund money for personal purposes. That is an administration outcome, not luck. If you are still choosing your structure, weigh these obligations honestly – our SMSF vs industry fund comparison covers who should and should not take them on. And from 1 July 2026, trustees of larger funds have a new reason for clean records: accurate earnings attribution under the Division 296 tax on balances above $3 million.
Prime Partners prepares SMSF financial statements and annual returns, coordinates the independent audit and manages the deadlines as part of our fixed-fee SMSF administration and tax service. If your fund’s audit is overdue, or you suspect a contravention needs rectifying before the auditor finds it, contact us – early and voluntary always beats late and discovered.