The liability for accrued benefits, or member entitlements, is the present obligation to pay benefits to members or beneficiaries in the future.

Accrued benefits of a SMSF may arise from:

• accumulation entitlements where the member bears the investment risk;
• pension accounts due to members; and
• insurance claims paid or payable to the SMSF owing to members.

The audit assertions with respect to a SMSF’s accrued benefits are:

• Existence – the accrued benefits are entitlements of members.
• Rights and obligations (ownership) – the accrued benefits are obligations of the SMSF.
• Completeness – accrued benefits of each member of the SMSF have been recorded.
• Valuation and allocation – accrued benefits are recorded at appropriate amounts and allocated to the appropriate account/member.

Audit risks for accrued benefits include, but are not limited to:

• contributions not being allocated correctly to members;
• income not being allocated correctly or appropriately to individual members;
• benefit payments or expenses being allocated incorrectly to member’s balances; and
• member balances not being carried forward correctly from one period to another.