Using the Work of an Expert


Some SMSF audit engagements may include aspects requiring specialised knowledge and skills in the collection and evaluation of sufficient appropriate audit evidence. In these situations, the auditor may decide to use the work of an expert who has the required knowledge and skills to assist the auditor, such as property valuers, actuaries, legal professionals or other professionals. Either the auditor or the trustee may engage the required expert. ASA 620 applies for an auditor’s expert, while Guidance Statement GS 005 Evaluating the Appropriateness of a Management’s Expert’s Work provides guidance on using the work of a management’s expert (an expert engaged by, or on behalf of, the trustee) (GS 005).


When using the work of a management’s expert, ASA 500 paragraph 8 and ASAE 3100 require the auditor to obtain sufficient appropriate evidence that the expert’s work is adequate for the purposes of the audit. In doing so, the auditor evaluates:

  1. the competence, capabilities and objectivity of the expert;
  2. whether the scope of the expert’s work is adequate for the purposes of the audit, including the reasonableness of the assumptions, method and source data used by the expert; and
  3. the appropriateness of the expert’s work as audit evidence, including the reasonableness and significance of the expert’s findings in relation to the audit of the SMSF.

Evaluating the Appropriateness of a Management’s Expert’s Work


Actuaries and valuers are experts generally appointed by the trustee to provide market valuations, actuarial valuations and certificates required by the SISA, SISR or the ITAA. The auditor applies the requirements of ASA 500 paragraph 8 and ASAE 3100 and refers to GS 005 for guidance on evaluating the appropriateness of management’s expert’s work as audit evidence.


The trustee is required to obtain annually, an actuarial certificate for funds with members in both pension and accumulation phases, where the assets are unsegregated, covering the proportion of income which is tax exempt.[80] Actuarial certificates will also be required if the fund pays a pension that is not prescribed under the SISR. Actuarial certificates are not required for accumulation funds paying pensions with segregated assets, if the assets are segregated for the entire year of income and the SMSF pays either: an allocated, market-linked or account based pension. A SMSF using the segregated method will need an actuarial certificate to claim exempt current pension income (ECPI) if it paid any other type of pension.


Since 1 July 2017, SMSFs that are classified as having disregarded small fund assets[81] are required to use the proportionate method for exempt pension income calculation, regardless of whether the fund is 100 per cent in the retirement phase. A SMSF has disregarded small fund assets if at least one fund member has a retirement phase income stream and:

  1. a fund member has a total superannuation balance that exceeds $1.6 million; and
  2. that member is receiving a retirement phase income stream from any source.

A SMSF can have disregarded small assets even if no members have an income stream exceeding $1.6 million or above in the SMSF. The only condition that must be present in the SMSF is that there is at least one member in the retirement phase. The remaining conditions can exist outside of the SMSF.


A SMSF that is 100 per cent in pension phase will be required to obtain an actuarial certificate that states the ECPI percentage is 100 per cent.


Where the auditor relies on an actuarial certificate produced by a management’s expert as audit evidence, the requirements of ASA 500 and guidance in GS 005 are relevant to:

  1. assess the competence, capabilities and objectivity of the actuary;
  2. obtain an understanding of the work of the actuary; and
  3. evaluate the appropriateness and adequacy of the work of the actuary, including:
    1. assessment of the relevance and reasonableness of the actuary’s findings or conclusions, their consistency with other audit evidence, and whether they have been appropriately reflected in the financial report;
    2. if the actuary’s work involves the use of significant assumptions and methods, consideration of the relevance and reasonableness of those assumptions and methods; and
    3. if the actuary’s work involves significant use of source data, consideration of the relevance, completeness and accuracy of that source data.


Actuarial reports are a means of assessing a SMSF’s progress in achieving its objectives of providing the member’s future benefits and in determining the share of the fund’s income that may be exempt from tax as a result of paying pensions to members.


See section 295-390 of the ITAA 1997.


Section 295-387 ITAA 1997.