What actually happens when a fund is established, and what an annual audit looks like when it goes smoothly — and when it doesn't. The examples below are illustrative scenarios drawn from the situations we see most often. They are not the records of any identifiable fund, and the figures are representative rather than reported client results.
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How to read these examples
Every SMSF is different, so the useful part of a case study isn't the balance — it's the sequence. Structures decided before money moves, evidence captured while the year is running, and valuations supported at the time they're struck are what separate a quiet audit from a slow one.
The setup examples show where the real time goes. Because everything is digital, preparing, signing and submitting the documents is fast — usually done within a couple of business days, instead of the weeks a manual, paper-based administrator spends on the same work. Registrations, opening the fund's own bank and broker accounts, and rollovers out of existing funds are what then set the calendar, and most of that sits with third parties rather than with us.
The audit examples show the issues that come up most: valuation evidence, the line between fund money and personal money, and investment strategies that were never reviewed. In nearly every case the underlying investment was fine; the problem was the paperwork behind it.
One thing worth saying plainly: not every audit query becomes a contravention report. Auditors apply the ATO's reporting tests, and many issues are closed out with documentation or a corrective step. But that judgement belongs to the independent auditor, and it isn't something an administrator can promise in advance.
Illustrative scenarios — representative composites, not identifiable client records
Fully digital process — setup documents prepared, signed and submitted within about 2 business days
Fund established in days, not the weeks a manual paper-based process takes; being invested then depends on third-party registrations and rollovers
Corporate trustee generally required where the fund borrows
Bare trust must exist before a geared property contract is signed
Most audit queries are record-keeping, not investment, problems
Valuations need supportable evidence, minuted at the time
Independent ASIC-registered auditor; audit included in the fixed annual fee
Three common starting points, and how each one was structured. See SMSF setup for the full step-by-step process and costs.
Setup example
Couple rolling two industry fund balances into one SMSF
The situation. Two members in their mid-40s with a combined balance of about $420,000 across two industry funds, wanting to hold Australian shares and ETFs directly through one broker account.
What was done
Corporate trustee registered so both members are directors and the fund's assets sit in the company's name
Trust deed, member applications, trustee consents and investment strategy prepared and signed electronically
Fund's own bank and broker accounts opened before any rollover was requested
Rollovers requested electronically once the fund's details were confirmed
Outcome. Fund operating with both balances consolidated and the first year's administration, accounts, tax return and independent audit covered by the fixed annual fee. Total first-year outlay: our setup and administration fee plus the government company registration and annual review charges.
Timing. Documents prepared, signed and submitted within 2 business days through the digital process; the fund was established within days, and the remaining time to invested was rollover processing by the outgoing funds.
Setup example
Single member planning a geared commercial property purchase
The situation. One member with around $310,000 wanting to buy a small commercial premises used by their own business, using a limited recourse borrowing arrangement.
What was done
Corporate trustee chosen because lenders generally require one for a borrowing arrangement
Investment strategy drafted to address concentration risk, liquidity for expenses and pension needs, and insurance
A separate bare trust and holding trustee company established before the contract was signed
Cash flow modelled so loan repayments, the annual levy, audit and administration were all funded from contributions and rent
Outcome. Purchase completed with the property held correctly in the bare trust and the borrowing documented. The auditor's first-year file needed no additional evidence because the ownership chain was set up before exchange, not after.
Timing. Setup and bare trust in place inside 2 weeks; settlement timing driven by the lender and vendor.
Setup example
Existing fund switching administrator mid-year
The situation. An established two-member fund on a percentage-of-balance fee that had grown to roughly $1.1 million, so the annual cost had risen with the balance rather than with the work.
What was done
Prior-year financial statements, tax return and auditor's report collected from the outgoing administrator
Opening balances reconciled to the last audited accounts before any new-year processing began
Bank and broker data feeds connected so the current year is processed continuously rather than at year-end
Outcome. Annual administration cost became a fixed amount independent of balance, and the fund's reporting moved from once-a-year to always current. Nothing in the fund's investments or structure had to change.
Timing. Handover completed in about 3 weeks, limited mainly by how quickly the previous provider released the files.
SMSF audit outcomes
What a clean audit looks like, and how two common queries were resolved. See SMSF audit for the annual audit process and independence requirements.
Audit example
Clean audit for a straightforward listed-investment fund
The situation. Two-member fund in accumulation phase holding listed shares, ETFs and cash, with contributions inside the caps.
What was done
Bank, broker and registry data feeds reconciled monthly through the year
Market values at 30 June taken from the fund's own broker and bank statements
Trustee minutes and the investment strategy review documented at the time, not reconstructed at year-end
Outcome. Unqualified audit report on both the financial statements and compliance, with no auditor queries requiring trustee follow-up. This is what most simple funds should expect when records are kept current.
Timing. Audit completed within weeks of year-end once the fund's data was finalised.
Audit example
Audit query on a related-party payment
The situation. A fund where a member had briefly paid a fund expense from a personal account and been reimbursed, and where a private company investment needed a supportable valuation.
What was done
The reimbursement was traced end to end and documented as an expense payment, not a loan or early access
A trustee minute recorded the circumstances and the corrective steps
An independent valuation basis was documented for the unlisted investment, with supporting financials at 30 June
Outcome. The audit was completed without a contravention report, because the evidence trail was assembled and the practice was corrected. Repeated or unreimbursed personal use of fund money is a different matter — that is reportable.
Timing. Resolved inside the normal audit cycle; no lodgement delay.
Audit example
Property valuation evidence for a fund holding real estate
The situation. A fund holding a single residential property that had been carried at the same value for three years, with the trustees relying on the original purchase price.
What was done
Market evidence assembled: comparable sales, rates notice and, for the year in question, an independent appraisal
The valuation basis was minuted, so the auditor could see how the figure was reached rather than just what it was
The investment strategy was revisited to address concentration and liquidity given the property's weight in the fund
Outcome. Audit completed with the revised value recorded in the accounts. The lesson generalises: the auditor is testing whether the value is supportable, not whether a formal valuation was commissioned every single year.
Timing. Two weeks added to the audit while the valuation evidence was gathered.
Patterns across the examples
What came up
Why it mattered
What resolved it
Trustee structure
Borrowing and member changes are far harder to unwind later
Decided before the fund was established
Asset ownership
Assets must be held in the fund's (or bare trust's) name
Accounts and trusts opened before money moved
Valuations at 30 June
The auditor tests whether the value is supportable
Comparable evidence or appraisal, minuted at the time
Fund vs personal money
Mixing the two is the most common source of contraventions
Traced, documented, corrected and minuted
Investment strategy
Must be reviewed and must address insurance and liquidity
Reviewed during the year, not written at audit time
All examples on this page are illustrative and general in nature. They are not client records and are not financial product advice — easySMSF provides SMSF administration, accounting and tax services.
Figures shown are illustrative only and based on the inputs and assumptions you provide. They are general information, not personal financial product advice. Consider your objectives, financial situation and needs, and seek personal advice from a licensed financial adviser before acting. easySMSF does not hold an Australian Financial Services Licence (AFSL).
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