The responsibilities of the SMSF’s trustee are contained in the SISA, SISR, and the governing rules of the fund. The trustee has ultimate responsibility for the compliance of the SMSF with the SISA and SISR and any other relevant legislation, such as the taxation legislation affecting SMSFs. Certain covenants affecting the behaviour of the trustee of a SMSF are deemed to be contained in the SMSF’s governing rules under section 52B and 52C of the SISA, which are in summary to:

1. act honestly;
2. exercise care, skill and diligence;
3. act in the best interests of beneficiaries;
4. keep the money and assets of the SMSF separate from the money and assets held personally by the trustee and from those of any employer-sponsor of the SMSF or their associates;^[18]
5. not enter into a contract or agreement that would hinder the trustee in properly performing their duties;
6. formulate and give effect to a reserves strategy if applicable to the fund;
7. formulate, review regularly and give effect to an investment strategy; and
8. allow beneficiaries access to prescribed information and documentation.

The trustees’ compliance responsibilities are summarised on the SMSF page of the ATO’s website.^[19]

The trustee of a SMSF is required, under the SISA, to ensure that financial reports of the SMSF are prepared and signed for each year of income and that an approved SMSF auditor is appointed no later than 45 days before the due date for lodgement of the SMSF annual return.^[20]

Financial Reporting and Accounting Standards applicable to SMSFs

Accounting and financial reporting by SMSFs are governed by:

1. AASB 1056 Superannuation Entities and other applicable Australian Accounting Standards (AAS);
2. the SISA and the SISR^[21];
3. ATO publications and guidelines;
4. the Fund’s Trust Deed; and
5. AASB 2020-2 Amendments to Australian Accounting Standards - Removal of Special Purpose Financial Statements for Certain For-Profit Private Sector Entities (March 2020).

SMSFs are generally not considered reporting entities and, consequently prepare special purpose financial reports. SMSFs would not typically adopt AASB 1056.  AASB 2020-2, issued in March 2020, removes the ability of certain for-profit private sector entities to self-assess their reporting requirements and to prepare a SPFS with effect from 1 July 2021.   In accordance with AASB 2020-2, SMSFs are required to prepare a general purpose financial report (GPFR) where their “constituting or other document, created or amended on or after 1 July 2021, specifically requires the financial report to be prepared in accordance with Australian Accounting Standards”^[22].

It remains the trustee’s responsibility to select the accounting framework and the auditor’s responsibility to assess the appropriateness of the framework^[23] as part of the preconditions of accepting an engagement for the individual SMSF. Audits of funds from 1 July 2021 require an additional check on the appropriateness of the accounting framework adopted by the SMSF in light of AASB 2020-2. Further consideration may be required when applying GS 009 to the audit of a SMSF that is required to prepare the financial report under the general purpose financial reporting framework. In the absence of the specific trust deed indicating the preparation of the financial report in accordance with AAS, legislative requirements prevail.