Prior to 3 years ago I was producing my SMSF Financial and Operating Statements using spreadsheets. My Auditor at that time advised that it was very difficult to check the figures and sums, and suggested that I start using software from the next year forward, which is what I did.
Unbeknownst to me, when I set up the data base and entered the starting balances and assets of the fund, the data base became corrupt. It was not apparent until the next Audit was undertaken, by which time it was too late to redo the whole process all over again.
In undertaking this years reconciliation, I cleared the whole database from scratch and reentered all the starting balances, asset details etc. It was the only way to progress, and it was what the software vendor suggested.
So while the database is now really good (probably the best it has ever been), none of the Financial or Operating statements from last years Audit match those from this year. There is no error with the member balances and income declarations in the tax return that was submitted to the ATO. The figures have always been 100% accurate, for every year.
The problem now is that this years Auditor has said that they won't do the Audit as they can't reconcile the balances of the Operating Statements (this year's starting balances with those of the closing balances of last year). If I tried to fiddle the numbers, then the Member balances would not be correct, nor aligned with what I provided the ATO on the tax forms (and I know for certain that what I have reported to the ATO is correct).
Ive never heard of Auditor Disengagement letters before, but I do now. If I go to another Auditor and ask an Audit to be done, I expect that they too will decline the request.
What do I do? I've done my best to uphold my responsibilities as Trustee of the fund, but if the Computer System failed like it did, what can I do? I don't want to falsify my reports just to get the Audit done, however if falsifying my Auditor reports in order to keep my fund in a compliant state is what I need to do, then should I just suck it up and do it? In the meantime, provide different, correct numbers to the ATO?
Alternatively, do I just not lodge anything and just put my fund into Non-Compliant state? And then just pay the top tax rate on earnings?
If I go into Non-Complaint mode, I suspect that I can't lodge tax returns, as it needs an Auditor to be assigned. So what happens then? Can I get back into Compliance again next year when I do the Audit, and where the balances will again properly match?
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