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I have audited a fund where the accountant has wound it up but has distributed assets in the form of in-specie payments. Members are past preservation age. He has treated the in-specie payments as a pension rather than a lump sum. I am uncertain whether this is a reportable contravention (ran through ESAT, was not prompted) or if there are any other compliance requirements of me. I appreciate any guidance.
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Hi Matthew
Agreed, pension payments are required to be made in cash. Any in-specie payments are required to be shown as lump sum payments.
I would request that the accountant amend the financial statements and the income tax return. I would be concerned that the Fund would not be entitled to exempt income if the required minimum pension payments had not been made. It may also mean that reporting of Transfer Balance Account transactions have not been correctly reported.
It may not be a reportable contravention but if the accountant does not amend the financial statements you could consider doing a Part A financial audit qualification. Depending on the impact on the financial statements and any pension or tax impact you could consider lodging an audit contravention report (ACR) re the area where you can use professional judgement.
Hopefully the risk of you lodging an ACR will encourage the accountant to amend the financial statements.
Thanks
SMSF AAA