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Clare Evans

Sep 12, 2022

Cash held in Safety Deposit Box

in SMSF Technical Forum

Hi fellow auditors,

I am auditing a fund that holds 75k in cash in a safety deposit box.

Any creative ideas on how to verify this asset is the funds? I figured I can at least get an invoice for the deposit box, but how to verify that anything in it belongs to the fund is a bit more complicated.

I will also check if there are other assets held in the box.

Any other thought on how to treat this and qualification issues would be appreciated.

Thanks,

Clare

5 answers0 replies

Comments (5)

ROBERT YOUNG

Sep 14, 2022

I would take the view that the cash has been withdrawn from the Fund ( pension and/or lumpsum ) and is no longer a Fund asset

Clare Evans

Sep 13, 2022

Thank you so much for that input. Yes, it is Australian cash and is material to the fund. One further point is that they are in pension mode, and that is how they access their pension, if that adds any clarity.

THE AUDITORS INSTITUTE

Sep 13, 2022

Replying to

Hi Clare

Thanks, being in pension mode does not change anything other than I do not know how you would be able to audit that the minimum pension was paid during the financial year. Perhaps you raise an audit qualification / ACR item that you have not been able to audit the minimum pension rules under SIS Sub Reg 1.06(9A). This is on the basis that you have not verified the pension being paid during the financial year.

If other members have a view as to how they would approach this please let the forum know.

Thanks

SMSF AAA

THE AUDITORS INSTITUTE

Sep 13, 2022

Hi Clare

I assume you are referring to Australian $ cash and not collectable bank notes. I also assume that the cash amount is a material asset of the Fund.

I have not come across a SMSF holding "cash" before but if I was the auditor I would be concerned as it would be hard to audit if the members had personal access to the cash during the year being audited.

From a financial audit my view would be that you would need to issue a financial qualification unless you sighted / verified the cash held. I would also request a declaration from the trustees that the Fund is the owner of the cash.

In relation to the compliance audit you would need to consider:

1) Section 62 - sole purpose test.

2) Section 65 - loan money / financial assistance to members.

3) Reg 4.09 - investment strategy.

You could consider making reference to the cash being held in the audit contravention report (ACR) in the professional judgement (additional information) part of the ACR. I would also raise my concerns in the annual management letter to the trustees.

If other members have a view as to how they would approach the audit of cash please let the forum know.

Thanks

SMSF AAA

Clare Evans

Sep 15, 2022

Replying to

Thank you all for the help. Much appreciated.

Clare