Using the Work of a Service Auditor


In relying on the work of a service organisation’s auditor under ASA 402, the auditor considers the professional competence of the service auditor in the context of the specific assignment and assesses whether the work of the service auditor is adequate for the SMSF auditor’s purposes.


In assessing professional competence of the service auditor, the auditor may gain some comfort from the other auditor having membership of a professional accounting body or affiliation with a reputable accounting firm.


With respect to the appropriateness of the service auditor’s work, the auditor considers whether:

  1. controls, balances, transactions or compliance with requirements relevant to the SMSF have been audited;
  2. an audit opinion, providing reasonable assurance, or a review conclusion, providing limited assurance, has been provided; and
  3. the service auditor’s report contains any modifications which may impact the audit of the SMSF.


In general, it is likely to be cost prohibitive for a SMSF auditor to undertake assurance procedures directly of an IDPS control environment. Where appropriate the SMSF auditor obtains the ASIC Class Order CO 13/763 auditor’s report and applying professional judgment, determines an appropriate risk assessment for the SMSF audit. The risk assessment for the audit determines the level of testing required for individual entries that underpin the financial report, such as contributions, payments to members, investment purchases and sales, as well as the size of the sample for testing asset valuation, particularly the larger positions reported on the tax statement.


Where the SMSF auditor is unable to obtain sufficient appropriate audit evidence regarding the custodial services provided by the service organisation relevant to the audit of the SMSF’s financial report, a limitation on the scope of the audit may exist. Whether the SMSF auditor expresses a qualified opinion or disclaims an opinion depends on the SMSF auditor’s conclusion as to whether the possible effects on the financial report are material or pervasive.[79]


See paragraph A42 of ASA 402 for further explanatory material.