SMSF Audit Compliance: What the ATO is Watching in 2025

Regulator Highlights Key Audit Risks and Compliance Focus Areas

The Australian Taxation Office (ATO) has outlined its compliance priorities for SMSF auditors in 2025, with a renewed focus on market valuations, high-risk auditors, and independence requirements.

With over 32,000 new SMSFs established in 2024, marking a 21% increase from 2022–23, the ATO is tightening its compliance measures to maintain the integrity of the SMSF sector, which now holds over $1 trillion in assets.

Key Areas of ATO Scrutiny for SMSF Auditors in 2025

1. Market Valuations & Sufficient Audit Evidence

The ATO continues to scrutinise SMSF asset valuations, emphasising the importance of auditors verifying and retaining sufficient evidence to support the reported market value of assets.

If an auditor cannot obtain adequate valuation evidence, they must modify the Independent Auditor’s Report (IAR).
An Auditor Contravention Report (ACR) must be lodged if required under the reporting criteria.

The ATO is also reviewing cases where SMSF asset values remain unchanged across multiple years, flagging potential compliance issues.

2. Auditors Handling Large SMSF Volumes

In 2025, the ATO will closely monitor auditors who:

Audit over 1,000 SMSFs per year.
Have rapidly increased their audit numbers in recent years.
Operate low-cost, high-volume audit models that may compromise audit quality.

The ATO will conduct on-site visits to review audit processes, ensuring compliance with professional standards.

3. Disqualified Trustees & Non-Compliance Risks

The ATO is also cracking down on SMSFs with disqualified trustees who continue to act in trustee roles.

Auditors must confirm that trustees or corporate directors are not disqualified individuals.
Where a disqualified trustee is found to be active, auditors are required to lodge an ACR.

4. High-Risk Auditors Under Closer Inspection

The ATO has ramped up efforts to identify and audit high-risk SMSF auditors, using its extensive data and intelligence systems.

Auditors flagged as high-risk may be:

Audited and referred to ASIC if found non-compliant.
Subject to increased monitoring and enforcement actions.

5. Auditor Independence Under the Spotlight

Auditor independence remains a top priority, following an increase in ASIC referrals related to independence breaches. The ATO will target auditors who:

Conduct in-house audits.
Have reciprocal auditing arrangements.
Maintain long-standing client relationships that may compromise independence.
Rely heavily on a single referral source for their audit business.

What This Means for SMSF Trustees & Auditors

With heightened ATO scrutiny, it’s essential for SMSF trustees and auditors to ensure compliance with regulatory obligations. Auditors must adopt robust audit procedures, ensure market valuations are properly substantiated, and maintain strict independence protocols to avoid penalties.

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Navigating ATO compliance requirements can be complex, but Boa & Co. Chartered Accountants can help ensure your SMSF audits meet regulatory standards. Our expert team offers: