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I am doing the super fund audit’s for a super fund that a member took $6000 out of the super fund to pay personal tax in the 2019 year.
I am doing back-to-back audits in September 2023 for 2019,2020,2021 2022 & 2023. (the client is getting up to date.)
In 2019 I qualified part B noting Section 67 breach and issued a ATO Audit contravention notice.
The client repaid the amount and paid interest in September 2023.( He was unaware of the breath until the accounts were done in September 2023 – he has had ATO releases for Div 293 & releases for excess contributions
My question below
My understanding as auditor is that;
a) Only the 2019 Audit contravention notice is required by the ATO .
b) I am required to qualify the audit reports for subsequent years 2020 – 2024 mentioning the same $6,000 year.
c) Annual return part B is Crossed as qualified for subsequent years 2020 – 2024.
Is this what other auditors recommend?
Hi Peter
As a starting point the $6,000 loan / financial assistance to a member only has to be qualified on in the audit report if it is a material breach. If it it is less than 5% of the fund's assets it may be a breach that you do not have to qualify the audit report in relation to.
This is similar for the auditor contravention notice that requires reporting if greater than $30,000 or greater than 5% of assets (and assuming it is not a new Fund & not a breach that has been previously reported).
Test 4 of the ACR instructions state:
"Test 4: Trustee behaviour test
You must report a contravention of a section or regulation listed in tables 1A and 1B where an identified contravention from a previous financial year has not been rectified at the time of the current audit.
Where the event contravenes a section or regulation only at the time it occurs (for example, a section 66 contravention), but it remains unrectified in the following years, it should continue to be reported. Even though the contravention does not actually occur in the following years, it should be reported under the section that was originally contravened.
You may be able to check this from viewing prior-year audit documents."
Refer:
That is if breach reported in 2018/19 year and breach remains unrectified you would continue to report it in later year ACR's.
Thanks
The Auditors Insitute