With respect to the financial audit, section 35C of the SISA requires the auditor to:

  1. give a report to the trustee, in the approved form, on the financial operations of the entity for that year; and
  2. give the trustee the auditor’s report in the approved form,[127] as issued by the ATO, within the prescribed time as set out in the SISR, being a day before the latest date stipulated by the ATO for lodgement of the annual return.[128]


ASA 700 requires the auditor to form an opinion as to whether the financial report is prepared, in all material respects, in accordance with the applicable financial reporting framework. In order to form that opinion the standard requires the auditor to conclude as to whether the auditor has obtained reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error.


ASA 220 requires that before the auditor’s report is issued, the auditor performs a review of the audit documentation and conducts a discussion with the engagement team, in order to be satisfied that sufficient appropriate audit evidence has been obtained to support the conclusions reached.


In forming an opinion, the auditor considers all relevant evidence obtained, regardless of whether it appears to corroborate, or to contradict, information contained in the financial report.

Modifications to the Auditor’s Opinion


Modifications to the auditor’s opinion under ASA 705 may be one of the following:

  1. a qualified opinion;
  2. an adverse opinion; or
  3. a disclaimer of opinion;

ASA 705 contains requirements and guidance regarding when a modification to the auditor’s opinion on the financial audit is necessary.[129]


Whenever the auditor expresses a modified opinion, a clear description of all the substantive reasons is included in the auditor’s report and, unless impracticable, a quantification of the possible effect on the financial report. If the effects or possible effects are incapable of being measured reliably, a statement to that effect and the reasons therefore are included in the basis for modification paragraph of the auditor’s report.

Qualified Opinion


A qualified opinion may be issued for a SMSF where the financial report is materially misstated or there is an inability to obtain sufficient appropriate evidence which is not material and pervasive as to require an adverse opinion or a disclaimer of opinion. The auditor’s inability to obtain sufficient appropriate audit evidence may arise from circumstances beyond the control of the entity, circumstances relating to the nature or timing of the auditor’s work or limitations imposed by management. Examples of circumstances beyond the control of the entity include when the entity’s accounting records have been destroyed. A qualified opinion is expressed as being “except for” the effects of the matter to which the qualification relates. The opinion paragraph is headed “Qualified Opinion”.[130]

Adverse Opinion


An adverse opinion is expressed when the effect of the misstatement is so material and pervasive to the financial report that the auditor concludes that a qualification of the auditor’s report is not adequate to disclose the misleading or incomplete nature of the financial report. The opinion paragraph is headed “Adverse Opinion”.

Disclaimer Opinion


A disclaimer of opinion is expressed when the possible effect of an inability to obtain sufficient appropriate evidence is so material and pervasive that the auditor is unable to express an opinion on the financial report as a whole. In these circumstances, the opinion paragraph is headed “Disclaimer of Opinion”.

Emphasis of Matter


The addition of an emphasis of matter paragraph does not affect the auditor’s opinion but draws the users’ attention to the matter raised. ASA 800 requires an auditor’s report (for a SMSF) to include an emphasis of matter paragraph to highlight the financial report is prepared in accordance with a special purpose framework and that, as a result, the financial report may not be suitable for another purpose. ASA 706 contains the requirements and guidance regarding an emphasis of matter paragraph. The ATO approved form auditor’s report[131] includes the required wording.


An auditor’s report may also include an emphasis of matter paragraph to highlight that the financial report has been revised due to the discovery of a subsequent event and replaces a previously issued financial report for which an auditor’s report was issued.

Other Matter


An auditor’s report may include a other matter paragraph to highlight:

  1. information about the auditor’s responsibilities, the audit or the auditor’s report;
  2. that the financial report of the prior period was audited by a predecessor auditor, the type of opinion expressed, the reasons if the opinion was modified and the date of the report; or
  3. that the auditor’s opinion on a prior period financial report differs from the opinion the auditor previously expressed.

ASA 706 contains the requirements and guidance regarding when another matter paragraph is necessary in the auditor’s report and the ATO approved form auditor’s report includes the required wording.

Communication of Audit Matters


Under ASA 260, the auditor communicates matters of governance interest arising from the audit to the trustee on a timely basis, to enable the trustee to take appropriate action. Ordinarily, the auditor initially discusses with the trustee and/or management those matters arising from an audit that are causing concern, including expected modifications, if any, to the auditor’s report. This provides the trustee with an opportunity to clarify facts and issues and to provide further information.


The auditor is also required under ASA 260 to inform the trustee of those uncorrected misstatements, other than clearly trivial amounts, aggregated by the auditor during the audit that were determined to be immaterial, both individually and in the aggregate, to the financial report taken as a whole.


Under ASA 260, the communication may be made orally or in writing, however, to meet the documentation requirements of ASA 230, the matters communicated, and any responses need to be documented in the audit working papers. Oral communications may need to be confirmed in writing depending on the nature, sensitivity and significance of the discussions.


Under ASA 265, the auditor communicates deficiencies in internal control that the auditor has identified during the audit and that, in the auditor’s professional judgement, are of sufficient importance to merit their respective attentions.


Under ASA 250, any non-compliance which the auditor considers to be intentional and material, is communicated to the trustee without delay. The auditor’s statutory reporting responsibilities in relation to matters of non-compliance may also necessitate reporting of such matters to the trustee and the ATO under section 129 of the SISA (see paragraphs 425 to 432).


The ATO approved form auditor’s report is available at


See regulation 8.03 of the SISR.


Recent case law Ryan Wealth Holdings Pty Ltd v Baumgartner [2018] NSWSC 1502; Cam & Bear Pty Ltd v McGoldrick [2018] NSWCA 110, indicates SMSF auditors have ‘significant ability to detect and prevent loss’ and ‘to protect the (audit) fund against financial risks’. The Part A financial audit is undertaken in order for the auditor to express an opinion on the likelihood of material misstatement in the financial report and that audit opinion must be made by an independent auditor.


See Ryan Wealth Holdings Pty Ltd v Baumgartner [2018] NSWSC 1502. A NSW supreme court appeal examined a significant loss within a SMSF due to material misstatement of the financial statements and found the fund’s auditor was liable for 80 per cent per cent of the loss incurred due to their negligence in not qualifying the auditor’s report.


The ATO approved form auditor’s report can be found on the ATO’s website: