ATO Cracks Down on In-House SMSF Audits: Independence Under Scrutiny

The Australian Taxation Office (ATO) has recently completed a targeted review into self-managed super fund (SMSF) auditors, with concerning results that raise urgent questions around auditor independence and compliance.

Out of 30 auditors examined in the review:

• 14 were referred to ASIC

• 6 voluntarily deregistered

• Only 2 were found to be fully compliant

These findings reveal a systemic problem in the SMSF audit sector, particularly where in-house audits compromise independence, a cornerstone of effective regulation.

Why Independence Matters in SMSF Audits

Auditor independence is not a procedural formality. It’s a fundamental principle that ensures audits are objective, credible, and free from conflicts of interest. When SMSFs are audited by related-party professionals — or when firms audit their own clients' SMSFs — the risk of bias increases, undermining trust in the SMSF system.

ATO Assistant Commissioner Justin Micale commented that independence failures "are not just technical breaches — they compromise the quality of audits and ultimately place members’ retirement savings at risk."

Frequently Asked Questions (FAQ)

❓ What is an “in-house” SMSF audit?

An “in-house” SMSF audit typically refers to an arrangement where the auditor is not truly independent from the SMSF administrator or tax agent — often operating within the same firm or with shared business interests. This structure risks violating auditor independence rules.

❓ Why is the ATO concerned about in-house audits?

The ATO’s review found a high rate of non-compliance among auditors conducting in-house audits. Many failed to maintain independence, potentially compromising the accuracy and objectivity of their audit reports.

❓ What happens if an SMSF uses a non-compliant auditor?

The consequences may include:

• Audit reports being invalidated

• Fines or penalties imposed on trustees

• Disqualification of the SMSF auditor

• Increased scrutiny or enforcement action by the ATO

  
  

❓ How can trustees ensure their SMSF auditor is compliant?

Trustees should:

• Verify that their auditor is registered with ASIC

• Ensure their auditor is independent from their accountant or administrator

• Ask for transparency in audit engagement terms

• Avoid bundled services that blur the lines between advisory and audit roles

  
  

❓ Is Lynden Group involved in SMSF audits?

Lynden Group provides SMSF administration and accounting services, but we partner exclusively with independent, ASIC-registered SMSF auditors. This ensures a clear separation between compliance work and audit review — keeping your SMSF above reproach.

Need Help with Your SMSF?

Whether you’re setting up a new fund or reviewing your compliance practices, our team is here to help. Reach out to Lynden Group for independent, compliant, and trusted SMSF support.

📞 Call us: (03) 8548 1843

📧 Email: info@lyndengroup.com.au

🌐 Visit: www.lyndengroup.com.au