.png)
This is a single member fund with a corporate trustee of which the member is the sole director. Gross assets exceeds $5m. There is an overseas investment portfolio (representing 21% of the gross assets) where the UK financial manager recorded one of the client's other companies (non superannuation) as the trustee in their profile and reports. This was clearly an error. The client is the sole shareholder of that company and is one of two directors. They are in the process of correcting this into the correct trustee company name but it is still going to be wrong for the 2022FY audit. Question 1: Will this be a Part B qualification and ACR? Question 2: If the second director resigns and the remaining director (also the member) signs an Acknowledgement of Trust in favour of the trustee company, will this avoid the Part B qualification and ACR? {Note that the second scenario proposal is for an Acknowledgement of Trust and NOT an Declaration of Trust.}
top of page
THE AUDITORS INSTITUTE | FORUM
Archived Forums
When you become a member of The Auditors Institute, you immediately gain access to expertise, advocacy for your profession and peace of mind.
Ask a question in our members-only forum or use the search function to find prior technical discussions on your topic. You can expect a response within 24-48hrs.
Disclaimer
The forum is made available by The Auditors Institute Ltd for the benefit of it’s members only, and its primary purpose is to facilitate education, training, and discussion between members. The information and answers provided within the forum are of a general nature and do not consider any specific circumstances, objectives, financial situation or needs related to the matter/s raised. The responses should not be construed as financial advice, and each Member should seek their own professional advice before making any decisions. The Auditors Institute Ltd and its representatives are not responsible for any actions taken based on the information provided in the forum.
bottom of page
Hi Ron
My view is to not to qualify re Regulation 4.09A if you raise it in your management letter and on the basis that the trustee has agreed to rectify the asset ownership of the overseas shares. Further at the time of signing the audit report the shares ownership is in the process of being rectified or has been rectified.
This view is on the basis that the incorrect ownership was due to an administrative error.
If you were not satisfied with the response from the trustee to your management letter or the action they have taken to rectify the error you should qualify your audit report (Part B) and report it in your audit contravention report (ACR).
If other members have a differing view please let the forum know.
Re the overseas shares 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."
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."
Thanks
SMSF AAA