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Effective 1 July 2021, AASB 2020-2 introduced mandatory general purpose financial statements for SMSFs if the deed stipulated the they are to be prepared according to AAS and not superannuation law. The majority of deeds state the financial statements are to be prepared in accordance with SISA which is fine for us as auditors. The question is if the deed is silent on how the financial statements are to be prepared, does it mean that the trustees can simply elect to prepare special purpose financial statements? If not, how does that impact upon the audit?
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Hi Ron
Yes AASB 2020-2 is a new accounting standard that applies from 1 July 2021.
The accounting standard is "Amendments to Australian Accounting Standards - Removal of Special Purpose Financial Statements For - Profit Private Sector Entities".
The standard does remove the ability for certain entities to no longer be able to choose to prepare special purpose financial statements (SPFS).
The standard means that for any new SMSF's established after 1 July 2021 for them to be able to prepare special purpose financial statements (SPFS) they need to ensure that their Trust Deed does not require the financial statements to be prepared in accordance with AAS's.
It is same for any SMSF's that vary their deed after 1 July 2021 they will need to ensure that their new Trust Deed does not require the financial statements to be prepared in accordance with AAS's.
I reviewed a new deed established in February 2022 (by a large deed provider) & its deed states:
"Records and Accounts to be kept
The Trustee must in such manner and form and at such time as required by the Relevant Law:
...prepare accounts, returns and statements in relation to the Fund as at the end
of the Financial Year."
Then it states:
"‘Relevant Law’ means:
(a) the Superannuation Industry (Supervision) Act 1993 (Cth) (‘SIS Act’);
(b) the Income Tax Assessment Act 1997 (Cth) (‘Tax Act’);
(c) the Corporations Act 2001 (Cth) (‘Corporations Act’);
(d) any successor acts and all Regulations made pursuant to the above Acts;
(e) in respect of Recognised Transfer Amounts such parts of the UK Regulations
which the Fund must satisfy in order for the Fund to satisfy QROPS
Requirements;
(f) any other legislation, requirements, standards, guidelines, rulings or
announcements which must be complied with or that the Trustee considers
desirable to comply with in order for the Fund to be a regulated and complying
superannuation fund;"
That is the above deed is not requiring that the financial statements be prepared in accordance with AAS's and as a result the Fund can prepare special purpose financial statements (SPFS).
As a result my view is that the new change from 1 July 2021 only applies to new SMSF's from that date or SMSF's that vary their deed from that date.
As long as SMSF's referred to above (new Funds after 1/7/21 or Funds with deeds of variations after this date) have a deed that does not require financial statements or accounts that are to be prepared in accordance with AAS's they will be able to prepare (or continue to prepare) special purpose financial statements (SPFS).
Auditors should be looking at deeds of SMSF's created or varied from 1 July 2021.
Thanks
SMSF AAA