My SMSF Audit Was Qualified—Should I Be Worried?

My SMSF Audit Was Qualified—Should I Be Worried?

If you’ve just received a qualified audit report for your Self-Managed Super Fund (SMSF), it’s completely natural to feel a bit uneasy.

But before jumping to conclusions, let’s take a moment to unpack what a qualified audit actually means, what you need to do, and how you can move forward with clarity and confidence.

Understanding SMSF Audit Reporting

As SMSF auditors, we’re required to follow strict Australian Auditing Standards—and when we complete an audit, there are typically three types of reporting outcomes:

1. Audit Report – Issued for every SMSF audit.
2. Management Letter – Highlights minor issues or suggestions for improvement.
3. Auditor’s Contravention Report (ACR) – Lodged with the ATO when significant or repeated breaches are identified.

Now, a qualified audit report simply means that the auditor couldn’t sign off on part of the audit—often due to missing documentation or limitations in verifying something. Importantly, it doesn’t necessarily mean that the trustees have done anything wrong.

Let’s take a closer look at what a qualification really means, and how to respond constructively.

Part A Qualifications – Financial Matters

What they involve:
Part A qualifications relate to the financial statements of your fund—usually where something can’t be fully verified or substantiated.

Examples include:

• Lack of documentation to support asset values
• Misstatements in income or expenses
• Missing prior year audit reports
• Inability to confirm balances

What to know:
These types of qualifications typically mean we’re not fully satisfied the financial records present a complete picture. But here’s the good news: in nearly all cases, Part A qualifications aren’t reported to the ATO.

Often, it’s simply a case of incomplete documentation—not a breach.

Part B Qualifications – Compliance Matters

What they involve:
Part B qualifications relate to superannuation law compliance—specifically, the Superannuation Industry (Supervision) Act 1993 (SISA) and SIS Regulations 1994 (SISR).

Examples include:

• Loans made to members
• Incorrect asset titling
• Borrowings that don’t meet the rules
• Breaches of the investment strategy
• Missing trustee documentation

What to know:
These issues are more serious—and in most cases, they are reportable to the ATO. Depending on the nature of the breach, the ATO may impose penalties, require rectification, or in very serious cases, consider whether the fund should retain its complying status.

That said, timely action can make a real difference—and that’s where open communication and collaboration really matter.

What Can Trustees Do?

Whether you’ve received a Part A or Part B qualification, it’s important not to panic. The key is to stay proactive, informed, and work with the right support.

Here are some practical steps you can take:

1. Review the Management Letter – This will provide context and recommendations.
2. Address Issues Promptly – If you’re able to rectify the issue before the audit concludes, we can often reflect that positively in our reporting.
3. Prepare Thoroughly – Use your auditor’s documentation checklist and ensure all necessary information is provided upfront.
4. Start the Conversation Early – If you’re unsure about something, don’t wait. Reach out to your accountant or auditor—early discussions can prevent bigger issues later.

We’re Here to Help—Especially When It’s Complex

At Saul SMSF, we understand that SMSFs can be complex, and mistakes can happen—even with the best of intentions.

That’s why we take a friendly, collaborative, and solution-focused approach to auditing. We’re not here to judge—we’re here to help you get it right, and to support you through the process.

If your fund has received a qualified audit report—or you’re worried something might be off—we’re only a phone call or email away. We’ve supported hundreds of trustees and advisers through sensitive or difficult situations, and we’ll gladly do the same for you.

Let’s work together to protect your fund and keep things on track.