ATO’s 2025 SMSF Auditor Compliance Focus

With the SMSF population growing, the ATO has issued guidance on what it will focus on regarding auditor compliance for 2025. They emphasised the critical role that SMSF auditors play in maintaining the health and integrity of the sector and the importance of understanding their obligations. The ATO considers the following as the biggest risks in 2025 and this is where their scrutiny will focus.

1. High-Volume of Auditors Under Scrutiny

Auditors conducting more than 1,000 SMSF audits annually or showing considerable growth in audit volume are under scrutiny. The ATO is conducting office visits to assess audit processes and ensure compliance with professional standards. This includes reviewing the competence of audit documentation and the application of audit procedures.

2. Emphasis on Market Valuations

Auditors are required to verify and retain sufficient evidence to support reported market values. In cases of insufficient evidence, auditors must consider modifying the Independent Auditor’s Report and lodge an Auditor Contravention Report where applicable.

3. Auditor Independence and Conflict of Interest Issues

Maintaining auditor independence is a key priority. The ATO is targeting auditors with potential conflicts of interest, such as those receiving a significant portion of their fees from a single referral source. Cases of auditors auditing funds where they have a vested interest or lack of objectivity are being referred to the ASIC for further action.

4. Audit Integrity and Documentation

The quality of audits is being examined more closely. Auditors are expected to maintain comprehensive and accurate documentation to support their findings. Inadequate or superficial audits, often associated with low- cost services, are being identified as high-risk areas. The ATO is addressing concerns regarding ‘audit shopping,’ where trustees switch auditors to avoid those who are stricter or more independent ones with ones who will issue favourable opinions without proper examination.

5.Disqualified trustees

Auditors must confirm whether the trustee is qualified when acting as a trustee or director of a corporate trustee as the ATO is reviewing auditors in cases where there is evidence that trustees continued to act while disqualified, but no Auditor Contravention Report was submitted.

 

Author

Anitta Rodrigues