.png)
Are you please able to confirm that that there is a legal requirement to prepare and provide members statements to members, which is defined as a benefit statement which is a report 'given under SISA, the Superannuation funds (excluded funds) taxation act 1987 or the governing rules' (SIS s105). I understand that this is not part of the regulation reporting stated in S35AE/S35B and that a separate section of SIS essentially requires these reports by regulation. I also understand that it may also be the SMSF's trust deed that dictates a requirement to provide these to beneficiaries.
Where would I find specific requirements of what a members statement should contain? Different sources (ATO, SIS, third party sources) state different things. None that i have seen really state specifics. I have even read that these are regulated through the corporations act. Specifically I need to know: Do they have to report taxable/tax-free components to their members, Do they have to present preservation benefit status to their members?
From an Audit perspective, do i need to be provided with these members statements in my audit of an SMSF? If a client provides me a basic members summary which, for instance shows opening/increases/decreases/closing but does NOT show preservation or taxable/taxfree components would I need to qualify my audit report?
I note the following management letter final paragraph from onlinesmsfaudit.com.au : 'I note the member statements attached to the financial report have not been audited, as this is outside the scope of our audit engagement. Whilst I do complete an audit of the movements in the member account during the financial year being audited, I am unable to provide an opinion as to the accuracy of historical components and eligible service date information that relates to transactions that occurred in prior years'
As you can see from above, im seeking to obtain requirements, firstly, around the preparation of members statements, then secondly, whether any compliance / auditing issues arise from a lack of information contained within.
Hi Mark
There is no SIS or other legal requirement that specifies how the financial statements have to record accumulation / pension balances in an SMSF 's special purpose financial statements.
For the auditor to be able to audit the financial statements there would have to be listing / reconciliation of each members balance re their accounts re their accumulation / retirement phase pension / non retirement phase pension balances.
BGL Simple Fund as an example in their statement of financial position lists each member and their different account balances. This is then further supported by a member statement for each account.
Thanks
SMSF AAA
Hi Mark
It would be great to get other member's views re this issue as it is an area where there is differing views.
My view is that technically the trustees of a SMSF do not have to prepare or give the auditor member statements on an annual basis (assuming the Trust Deed does not require it). If the client provides the auditor a basic members summary which, shows opening / increases / decreases /closing balances and does NOT show preservation or taxable / tax free components then my view is you do not need to qualify your audit report.
In relation to the member statements the audit report re Part A typically states that the auditor has audited the:
"special purpose financial report comprising the Statement of Financial Position as at 30 June 2021, the Operating Statement for the year then ended, a summary of significant accounting policies and other explanatory notes of the XYZ Superannuation Fund for the year ended 30 June 2021".
Based on the above the auditor has to audit the member's balances but is not auditing the details / components that are in the member statement. The auditor should review the tax free / taxable components and preserved / non preserved components as these details are very important to the members of the Fund & it would also make the auditor's role difficult if they are not properly tracked and recorded.
If the member component's are not being properly recorded this should be raised as a management letter item and rectified. As an example I was recently involved in a Fund where we were trying to calculate the tax free / taxable components for a Fund that started in 1993. My view is that if the auditor had not highlighted this issue in the past they could be at risk of the trustee's taking action against them.
Thanks
SMSF AAA