What SMSF Auditors are Focusing on in 2026
As we move into the final stages of the 2026 financial year, there are several key focus areas that will continue to attract scrutiny from both auditors and the ATO. We encourage our clients to pay proactive attention to these areas in order to reduce audit delays and avoid non-compliance.
Below is a summary of audit focus areas for the year ahead.
1. Investment Strategies
Investment strategies remain a key focus area, particularly where funds hold low diversification, and high-risk assets such as:
➔ Unlisted investments
➔ Loans
➔ Cryptocurrency
Trustees must ensure the investment strategy clearly documents:
➔ Why the investment is appropriate for the SMSF
➔ How it meets the Sole Purpose Test
➔ How diversification will be managed and improved over time
➔ The trustees’ expertise with the asset class
➔ An acknowledgement of the risks involved
Where concerns have previously been raised in management letters, auditors will expect to see revised and strengthened investment strategies in the current year.
2. Valuations – Increased Focus in 2026
Asset valuations will receive heightened attention, particularly in light of the proposed Division 296 legislation impacting members with balances above $3 million.
Valuations that are unchanged year-on-year are a focus point from the ATO. Valuations must be current, and supported by the appropriate documentation.
Before submitting funds for audit, please ensure:
➔ Valuations are supported by objective, third-party evidence, relevant to the current financial year
➔ A partner-level review has been performed
If trustees have exhausted all efforts to obtain appropriate evidence, this should be communicated with your auditing team at the commencement of the audit.
We’d recommend all trustees read through the ATO’s guidance on SMSF asset valuations, which can be accessed here:
3. Property Valuations
Residential Property
➔ A CoreLogic (or equivalent) report must support the 30 June valuation
➔ The report must reflect the value as at 30 June — not the date when accounts are prepared
Commercial Property
➔ A real estate appraisal supported by recent comparable sales is required
➔ Where sales evidence is limited, rates notices may assist in supporting valuation movement — but will still need to be accompanied by a real estate valuation to comply
Property valuations remain one of the most common causes of audit delays. The issues we encounter most frequently include:
➔ Outdated reports carried forward from prior years
➔ No attempt to obtain updated valuations
➔ Inadequate sales evidence
Valuations must clearly state they apply as at 30 June of the relevant year. If they do not, they cannot be relied upon.
For funds impacted by proposed Division 296 legislation, we recommend considering the use of a registered valuer. Here are a list of trusted property valuers:
➔ Acumentis – www.acumentis.com.au
➔ SMSF Property Valuations – www.smsfpropertyvaluations.com.au
➔ Property Pricer – www.propertypricer.com.au
Head to our recent blog post on the top 3 asset valuation areas that trigger audit issues for more details on what to look out for: https://supergreentick.com.au/insights/top-3-asset-valuation-areas-that-trigger-audit-issues-dccdc
4. Leases
We now require documentation confirming tenancy arrangements, including:
➔ A copy of the lease agreement
➔ Written confirmation from trustees stating whether the tenant is a related party
For related party leases, where a new lease is entered into or an option to extend has been taken up — third-party evidence must demonstrate that the lease is at market value.
5. Unlisted Unit Trusts and Company Investments
For unlisted entities, the following will be required:
➔ A full set of financial statements for the entity
➔ Updated property valuations if a property is the primary asset
➔ Supporting workpapers detailing how market value was determined
If relying on a capital raise as evidence of market value, it must:
➔ Occur close to year end
➔ Be conducted at arm’s length
6. SuperStream Rollovers
With compulsory SuperStream rollover requirements now in place, we are seeing trustees fail to retain transfer documentation.
Trustees (and administrators acting on their behalf) should ensure copies of rollover and transfer documentation are obtained as audit evidence.
Early preparation means less audit delays
A consistent theme across all focus areas is documentation, and in our experience, most audit delays arise from insufficient or incomplete supporting evidence.
Ensuring valuation evidence is obtained at 30 June, investment strategies are tailored and up to date, and supporting documents are complete prior to audit submissions will significantly streamline the 2026 audit process.
If you are unsure about documentation requirements, or have questions ahead of your audits, we’d encourage all clients to reach out ahead of time, so we can prepare in advance to avoid audit delays and non compliance.