Advice Matters: ASIC targets SMSF auditors amid rising compliance failures

ASIC has increased its focus on SMSF auditors after identifying significant problems with audit quality. In a recent update, ASIC said it had taken action against 28 SMSF auditors in the first half of the 2025–26 financial year. [1] The breaches by SMSF auditors included not following auditing standards, losing independence, not keeping up with required training, and not responding to ASIC’s requests.

The actions taken by ASIC included banning auditors, cancelling auditor registrations, and adding new conditions to some registrations. These actions highlight ASIC’s continued focus on lifting standards across the SMSF sector.

This article outlines ASIC’s recent actions to address growing problems with SMSF audit quality, the main types of breaches ASIC found, and why these issues matter for trustees and the wider superannuation system. It also outlines what good SMSF audit practice looks like and highlights the key takeaways that SMSF trustees and auditors should keep in mind

Why This Matters

SMSF auditors play an important role in protecting the integrity of Australia’s superannuation system. Their work assists trustees, advisers, and regulators in feeling confident that SMSF financial statements are materially accurate and compliant with the law.

ASIC’s latest enforcement actions show that it expects auditors to be independent, competent, and stay up to date with training requirements. When auditors don’t meet these fundamental standards, it not only exposes those auditors to risks of penalties but also compromises the retirement savings of SMSF members, where errors or breaches might not be found, which will ultimately impact public trust in the broader superannuation system.

What ASIC Found

Between 1 July 2025 and 31 December 2025, ASIC undertook compliance actions that led to:

• four auditors being disqualified;
• two auditors having additional conditions imposed on their registration; and
• 22 auditors having their registrations cancelled.

ASIC found a wide range of breaches which led to the above compliance actions, including:

1. Non‑compliance with auditing and assurance standards
   

Some auditors did not carry out enough audit work or lacked the necessary practical experience. ASIC cancelled the registrations of nine auditors after finding that they had not performed any significant audit work in the past five years. ASIC identified these breaches through its own reviews and referrals from the ATO.

2. Independence failures – particularly in in‑house audits
   

ASIC reported a sharp increase in independence breaches arising from in‑house audits, where firms both prepared and audited the same SMSF’s financial statements. In two cases, ASIC disqualified auditors who continued these practices even after ASIC imposed conditions on their registrations that were aimed at preventing these issues.

3. Administrative and regulatory failures
   

Common lapses included:

• not lodging annual statements;
• not maintaining professional indemnity insurance;
• not updating contact details on the public register; and
• failing to respond to ASIC regulatory requests.

These issues show that many audit firms need stronger systems to manage their obligations and ensure that they remain compliant.

Increased Scrutiny on In‑House Audits

ASIC highlighted its ongoing crackdown on in‑house audit arrangements, which pose a well-known risk to audit independence. Independent auditing requirements prohibit SMSF auditors from auditing statements prepared by their own firm – unless the services provided are strictly ‘routine or mechanical’, and independence threats are properly managed.[2]

What Good SMSF Audit Practice Looks Like

ASIC’s actions reinforce what strong SMSF audit practice requires:[3]

1. Use professional judgement and maintain independence
   

Auditors must objectively assess their independence and avoid situations where a firm’s accounting work affects their ability to audit objectively. Independence breaches are now a key focus for ASIC enforcement.

2. Maintain current auditing expertise and CPD
   

Auditors must maintain up‑to‑date practical experience and keep their training and professional development current in order to retain their registration.

3. Robust compliance administration
   

Auditors must ensure that they:

• lodge required annual statements;
• maintain valid professional indemnity insurance; and
• respond promptly to regulatory correspondence.

4. Demonstrate audit quality
   

ASIC expects auditors to perform sufficient and properly documented audit work. Poor workpapers or evidence failures often lead to sanctions.

The Bottom Line

ASIC’s action against 28 SMSF auditors signals a clear message: audit quality and independence are not optional. As ASIC increases its scrutiny, it is crucial that auditors, advisers, and accounting firms maintain high standards of professional practice and comply with ASIC’s regulations.

Trustees should also remain proactive in verifying the qualifications and independence of their SMSF auditors. Strong audit practices protect not just individual funds but also the credibility of the SMSF sector as a whole.

More information from Maddocks

For more information please contact Maddocks in Melbourne (03 9288 0555) and ask for a member of the Commercial Team.

More Cleardocs information on related topic

You can read earlier ClearLaw articles on a range of related topics, such as:

• Advice Matters: ASIC Warns of Poor SMSF Practices
• Super Under Siege: ASIC Flags Spike in Misconduct in Latest Annual Report
• Update for SMSF Trustees: ATO Enforcement Actions for Non-Compliance

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[1] Australian Securities & Investments Commission (26-010MR ASIC acts against 28 SMSF auditors, flags increased scrutiny on in-house audit breaches | ASIC).

[2] Australian Securities and Investments Commission, April 2025, SMSF auditor independence compliance focuses | Australian Taxation Office.

[3] Australian Securities and Investments Commission, March 2019, RG 243 Registration of self-managed superannuation fund auditors | ASIC.