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I am working on an audit that the trustee of the fund has transferred $300k to a scammer.
The only evidence that I have been provided is the bank statements showing the money has been transferred to an overseas account.
I actually feel sorry for the trustee as he is an old farmer who should not place trust in the scammer in the first place.
My question is that as the auditor of the fund, do I need to ask for more evidence regarding the scam because I guess if I ask more question it could place further harm or unnecessary humiliation on the old man, but on the other hand what if the trustee is the "bad guy" who is stealing the money from the fund and the scam was a disguise.
The accountant of the fund recorded the $300k as an overseas investment on the book, and then written down the valuation to NIL.
I haven't dealt with a similar situation before and I appreciate it if someone can offer some insight.
Hi Max
Sorry for your client. I have had one such scam investment in a SMSF but it was about $10,000 out of $300,000 in investments.
As an auditor you need to be satisfied that the investment was made on an arm's length basis, complied with the sole purpose requirements and was in line with the investment strategy. The ability to audit the investment is obviously difficult if it is a scam.
As an auditor I would request a declaration from the trustee be signed explaining that the investment was a scam and that everything has been done to try & recover the money. The auditor needs to be satisfied that appropriate steps have been taken to collect the lost money.
I would also consider lodging an ACR where you provide details to the ATO re the scam re the "other information" that can be reported.
Thanks
SMSF AAA