Key Insights from the Auditor’s Institute Update: Daniel Surjenko’s Takeaways for 2025–26

As the SMSF landscape continues to evolve, staying ahead of regulatory expectations has never been more important. Daniel Surjenko, Partner and ASIC-registered SMSF Auditor at Superannuation Audit Services, recently attended the Auditor’s Institute update delivered by Kellie Grant, Director of Approved SMSF Auditors at the ATO’s SMSF Regulatory Branch.

Daniel has summarised his key takeaways from the session, offering practical insight into the ATO’s priorities for the 2025–26 year and the areas where SMSF auditors and trustees need to be especially vigilant.

The ATO’s Compliance Focus for SMSFs in 2025–26

With over $1 trillion now held within the SMSF sector, the ATO has sharpened its focus across a number of critical compliance areas. According to Daniel, these are the headline issues for the coming year:

1. Scams and Fraud

The rise in fraudulent activity targeting SMSF members and funds has made this a top priority. Trustees and auditors should expect heightened scrutiny around transactions, identity verification and unusual activity.

2. Non-Lodgement Funds

The ATO will continue to crack down on SMSFs failing to lodge returns on time or at all. Non-lodgement remains a significant indicator of broader compliance issues.

3. ACR Lodgements

Every Auditor Contravention Report submitted will be reviewed and responded to. This reinforces the need for auditors to ensure ACRs are complete, accurate and supported by appropriate evidence.

4. Non-Arm’s Length Income (NALI)

The ATO’s focus on NALI remains strong, particularly where arrangements may suggest undervalued services or non-commercial dealings.

5. Release Authorities & Commutation Authorities

Funds that do not act promptly or correctly on release authorities and commutation authorities will be subject to direct ATO follow-up.

6. SMSF Asset Valuations (Reg. 8.02B)

Accurate, well-supported asset valuations remain essential. The ATO will specifically assess whether trustees and auditors have obtained sufficient, appropriate audit evidence to support market values.

What the ATO Expects from SMSF Auditors

Kellie Grant’s update also detailed several audit-specific targets the ATO will pursue over the next year.

1. Continuation of High-Volume Auditor Reviews

Auditors responsible for more than 1,000 funds remain a significant focus. Daniel himself has already undergone this review, and passed successfully.

2. High-Risk Auditor Reviews

These reviews are triggered by ATO benchmarking and risk profiling, identifying auditors whose results or processes fall outside normal ranges.

3. In-House & Reciprocal Auditor Reviews

The ATO is closely examining reciprocal audit arrangements and in-house auditing structures for independence risks.

4. Asset Valuation Evidence

Auditors must demonstrate robust documentation supporting asset valuations. Insufficient evidence under Reg. 8.02B remains one of the most common audit failures.

5. “Nil Audits” Over Five Years

Funds with repeated “nil audits” over five consecutive years will now be actively examined.

6. Long-Term Auditors Now Considered Higher Risk

The ATO now views auditors who have signed off the same fund for 10 consecutive years as a higher risk category.However, this risk can be reduced through internal or external file reviews, which the ATO has acknowledged as an appropriate risk-mitigation control.

Common Audit Failings the ATO Continues to Identify

Many audit issues continue to arise from a predictable set of problem areas. Daniel highlights the key categories where auditors and trustees must improve:

1. Section 109 – Missing or Incomplete Leases

Funds must maintain written lease agreements, including back-to-back leases for continuity.

2. Charges Over Titles Not Evidenced

Auditors should obtain annual title searches for all properties—including those held under an LRBA.

3. Prohibited Borrowings – s.67 & s.67A

The ATO continues to find breaches relating to improper or prohibited borrowing arrangements.

4. Regulation 8.02B – Insufficient Valuation Evidence

Trustees must maintain documentation supporting market valuations. Auditors must verify and retain adequate evidence on file.

5. Unsigned Accounts

Unsigned financial statements remain a surprisingly common audit failure. Funds must ensure accounts are fully executed before the audit begins.

6. Section 84 – In-House Asset Breaches

In-house asset infringements continue to be missed or misidentified.

Audit Fee Benchmarks Under Review

The ATO noted that the average SMSF audit fee is approximately $550, with the median at $650. Significantly lower fees may trigger review, as they are often correlated with insufficient audit procedures.

Final Thoughts from Daniel Surjenko

Staying compliant in an increasingly complex SMSF environment requires strong processes, solid documentation and independent, high-quality audits.

As Daniel concludes:

“The ATO’s message is clear: thorough documentation, strong audit evidence and maintaining independence are essential. With the right processes, SMSF trustees and auditors can meet the ATO’s expectations confidently and consistently.”

At Superannuation Audit Services, our team is committed to supporting accountants, advisers and trustees with reliable, independent and efficient SMSF audit services, ensuring every fund meets its compliance obligations.

Time to make the switch to our highly-experienced firm?

Book a FREE consultation with our team of dedicated SMSF auditors today.

---

Disclaimer: This communication is for general informational purposes. For tailored advice specific to your firm’s circumstances, please contact us directly