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Jean Rey

Jun 29, 2021

in SMSF Technical Forum

Hi SMSFAAA team,

I am auditing a fund that had an in house asset in a private company (invested $130,000 and total asset value $200,000). The fund was established in June 2016 and the investment was made in the 2018 FY.

The fund wound up in 2020 (without any documentation), transferred the $70,000 cash balance in a complying superannuation fund, and wrote off the in house asset as investment loss.

The trustees cannot provide financial statements for the company and the company is still registered.

I will lodge a contravention report for the investment in the in house asset. Is there anything else you would do?

Thank you in advance.

Yousr Sincerely

Jean Rey

1 comment

Comments (1)

THE AUDITORS INSTITUTE

Jul 02, 2021

Hi Jean

I would also consider doing the following:

1) Qualify re section 35C(2) re not being able to be provided with necessary documents to complete the audit.

2) Qualify re section 62 re breach of the sole purpose test.

3) Qualify re section 65 if you consider this to be financial assistance to a member.

4) Qualify re section 109 if you consider investment was not made on an arm's length basis.

5) Adding the above qualifications (if done) to the Audit Contravention Report (ACR).

Thanks

SMSF AAA