And why cheap SMSF audits may not be good value
Your SMSF audit fees pay for an independent, expert opinion on the state of your superannuation investments. In fact, a detailed audit is essential to the viability of your super fund, because the ATO is cracking down on funds that contravene the legislation.
For the SMSF audit fee, you get an experienced and impartial set of eyes over all your documents. It’s one of the best ways to make sure that trustees or accountants haven’t missed anything. You’d be shocked at how often auditors find errors – as small as a single incorrect digit in a calculation – that can throw the whole fund into trouble.
Whether you’re thinking about starting a new SMSF, or you’re checking if the SMSF audit fees you’ve been quoted are reasonable, we’ll show you:
- The range you can expect to pay in SMSF audit fees
- What’s usually included in the fees
- What to look for in a good quality SMSF audit
- Why SMSF audit fees vary from under $300 to $2000+
- Why you should be cautious of very cheap SMSF audits
- Plus some of the extra costs (and associated risks) of cheap audits that you may not have considered
Average and median SMSF audit fees (from ATO stats)
Each year, the ATO publishes statistics about self-managed superannuation funds in Australia, and the stats include typical SMSF audit fees.
The average SMSF audit fee in 2016-2017 was $688, and the median audit fee was $550.
Average and median SMSF audit fees from 2012 to 2017. In FY2016-2017, the average SMSF audit fee was $688 and the median SMSF audit fee was $550. Statistics from the ATO here.
Interestingly, the average cost of SMSF audits has come down over the last 5 years. In part, this could be due to improvements in technology and communication, which saves processing time for SMSF auditors.
In FY2016-2017, about half of all SMSF audits cost in the range of $500-$999. A further 37% cost under $499.
Distribution percentage of SMSFs by audit fee range, from 2012 to 2017. In FY 2016-2017, 37.6% of SMSF audits cost $0-$499, 50.4% of SMSF audits cost $500-$999, 9.8% of SMSF audits cost $1000-$1999, and 2.1% of SMSF audits cost $2000 or more.
This data shows that if you have a fairly standard fund structure, you can expect to pay in the range of $500-$1000 in SMSF audit fees.
If your fund structure is complex, you may need to allow for $1000+. And if your super fund is very simple, you may be able to get your audit done a bit cheaper, such as under $400.
There are plenty of cheap SMSF audits out there, but the question is:
Will a cheap SMSF audit provide the service that you need?
One way auditors can offer low cost audits is to automate some of the processes, with shortcuts such as using Artificial Intelligence to check bank feeds and cross check data. Alternatively, cheap auditors might send some of the labour-intensive work offshore where labour is cheaper, to retain both their cheap price and their margin.
A partially automated, cheap SMSF audit will tick the box on your annual return to say you had the fund audited by a licenced auditor. (You can check that your auditor is correctly licensed on ASIC’s SMSF Auditor register here).
But you’d have to think that for a very low price, you’re just getting the bare basics done. There’s simply not enough time allowed in a very low fee for an experienced human to complete thorough checks. Especially if the fund is complex, such as a fund that has a lot of different investments or members in different superannuation phases.
With technology doing the bulk of the SMSF audit, there are serious risks.
AI is a computer program, so it will only find what it has been programmed to find. It simply runs the data by a set of rules. There’s little human intervention, no higher reasoning, and no judgement about suitability of the fund and its investments.
The risk for trustees is that the technology may not pick up potential breaches. AI simply can’t make the leaps of logic required to dive deeper into high-risk investments or potentially non-arm’s-length transactions.
When you’re asking “what does an SMSF audit cost?” you should also be asking about the process that the auditor takes:
- Is the auditor licenced and independent?
- Who is doing the nitty gritty audit work, and what’s their level of experience?
- Are any elements of the audit automated or computer-based?
- Are any processes off-shored or handed to junior auditors?
because these factors all play a part in the fees, costs and risks of the audit.