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We had audited a fund last year which had investments in the names of only two of the four trustees. We noted this in the management letter and instructed the trustees to correct the investment name to include all trustees. Upon receiving the audit for this year, the trustees are refusing to change the name on the investments to add the two new trustees. I cannot see the actual SIS Act reference for this and am unsure whether it is a qualification. What would be best practice in this case?
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Thanks, yes the shares are held in the two trustees names ATF superannuation fund. Two new trustees were added later which caused the issue. I will request an acknowledgement of trust, thanks for your advice. Much appreciated!
Hi Kate
Thanks, I assume the shares are held in 2 of the trustees names as trustees for the Superannuation Fund. That is the Fund is referred to on the investment paperwork.
Re the share ownership issue Regulation 4.09A of SIS requires that:
"A trustee of a regulated superannuation fund that is a self managed superannuation fund must keep the money and other assets of the fund separate from any money and assets, respectively:
(a) that are held by the trustee personally; or
(b) that are money or assets, as the case may be, of a standard employer-sponsor, or an associate of a standard employer-sponsor, of the fund."
My view is that if the investments are in the name of 2 of the trustees in trust for the Fund it is technically not a breach of Regulation 4.09A as the assets are kept separate from any personal assets (as it is in the name of the Fund). An acknowledgement of trust should be requested to state that the 2 trustees hold the shares / investments in trust for the Fund (& noting that there are 4 individual trustees). This would be best practice.
The ATO gives guidance on Regulation 4.09A of SIS & states at:
https://www.ato.gov.au/super/self-managed-super-funds/smsf-auditors/auditing-an-smsf/compliance-audit/
"The auditor should obtain evidence that the fund’s money and assets are held separately from money and assets held personally by the trustees or a standard employer-sponsor by:
· sighting asset ownership documents, including bank statements, to verify SMSF assets are held in the name of trustees on behalf of the fund (for example, R & J Smith as trustees for the Smith SMSF or R Smith Pty Ltd as trustee for the Smith SMSF) and not in the name of the trustees alone
· where State law prevents ownership in the SMSF’s name, checking for alternative documentation that protects the fund’s assets (for example, a valid declaration of trust)
· reviewing transactions on bank statements to ensure fund money is not mixed with money belonging to related parties of the SMSF.
Where there has been a change in trustees, the auditor should obtain evidence that ownership documents reflect the change."
It would be great to get other members view on this issue as it is a common issue faced by auditors.
Thanks
SMSF AAA