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Clare Evans

Jun 15, 2022

Actuarial Certificate and members statement

in SMSF Technical Forum

Hi Auditors,

I have been provided an actuarial certificate in which the opening balances match the members statements provided by the accountant, but the closing balances are significantly different. It appears the difference is due to the increase in NMV of assets not being considered by the actuary. Could the certificate be out due to this difference?

The same accountant does not provide too much detail on the members statements either. Such as tax free component. Have others come across the same situation? Should I suggest she find a more detailed report within her software?

Thanks in advance for the input.

Clare

2 answers0 replies

Comments (2)

Clare Evans

Jun 16, 2022

Thank you so much for that very helpful response. Much appreciated.

THE AUDITORS INSTITUTE

Jun 16, 2022

Hi Clare

Yes the actuarial certificate would be incorrect due to not recognising the correct asset values at the end of the financial year. You should request the accountant get an updated actuarial certificate. Another option (that could be considered) may be to see if you can verify if the actuarial % calculated by the actuary is materially correct (based on your estimate). Preferably a corrected actuarial certificate would be obtained.

In relation to the member statement not recording the tax free components yes I would request the accountant use a more detailed software if these components are not being separately tracked. Software examples that track these components are BGL 360 & Class.

In relation to this issue my view is that technically the trustees of a SMSF do not have to prepare or give the auditor member statements on an annual basis (assuming the Trust Deed does not require it). If the client provides the auditor a basic members summary which, shows opening / increases / decreases /closing balances and does NOT show preservation or taxable / tax free components then my view is you do not need to qualify your audit report.

In relation to the member statements the audit report re Part A typically states that the auditor has audited the:

"special purpose financial report comprising the Statement of Financial Position as at 30 June 2021, the Operating Statement for the year then ended, a summary of significant accounting policies and other explanatory notes of the XYZ Superannuation Fund for the year ended 30 June 2021".

Based on the above the auditor has to audit the member's balances but is not auditing the details / components that are in the member statement. The auditor should review the tax free / taxable components and preserved / non preserved components as these details are very important to the members of the Fund & it would also make the auditor's role difficult if they are not properly tracked and recorded.

If the member component's are not being properly recorded this should be raised as a management letter item and rectified. As an example I was recently involved in a Fund where we were trying to calculate the tax free / taxable components for a Fund that started in 1993. My view is that if the auditor had not highlighted this issue in the past they could be at risk of the trustee's taking action against them.

Thanks

SMSF AAA