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The trustee of a smsf fund, in accumulation mode ,invested $100000 in a bank TD prior 30 june 2023.
the bank mistakenly recorded the investment in the members name .
that i believe creates a loan to member situation (breach)
the bank has discovered this and has agreed to break term and refund $100000 to the smsf .
the amount won't be refunded till this current year 2024.
As the auditor ,am I required to report this as a breach, as a loan to member ??
The amount $100000 is shown in the smsf accounts as a refundable deposit as at june 2023
any comment
Hi Mike
My view is given that the error was made by the bank and is being rectified then you would not treat this as a loan to a member.
As a result there is no breach of SIS to qualify on re a loan to a member.
As auditor you should refer to the issue in your management letter. You should make reference to SIS Regulation 4.09A that requires per the audit report:
"The assets of the SMSF must be held separately from any assets held by the trustee personally".
Thanks
The Auditors Institute