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Jennifer Yu

Feb 20, 2023

Scammed bank account

in SMSF Technical Forum

Dear Support,

We have a SMSF client who are in his 90s. He declared that two transactions (in a total of $26k) from his SMSF to his personal bank account were done by the scammer. His personal bank account was scammed in a total of $98k(in few days by multiple transfers) which was acknowledged by the bank. The accountant treated $26k as a SMSF loss; however, the bank only provides information that the scammer took money from his personal bank account. His SMSF has a balance of $240K. Is this the correct accounting treatment?

The fact is the money $26k was transferred from SMSF bank account to his personal bank account, as far as how the personal fund to be used/consumed, do we need to take consideration? The accountant said he can't treat it as a pension as the client didn't actually receive that money.

Your help will be appreciated!

Kind Regards

Jennifer

6 answers0 replies

Comments (6)

Eric Taylor

Feb 22, 2023

I would be asking more questions first. How did the scammer access the SMSF account? (They may be linked). Why did the scammer transfer to his personal account, not direct to the scammer? Why did the scammer stop at $26,000. There may be answers (withdrawals from the SMSF only to a linked account, withdrawal limits etc.), but I would certainly ask the questions to get the complete picture.

Jennifer Yu

Feb 22, 2023

Replying to

Thank you Eric for your insight! Yes, I did ask these questions and have different opinion from the accountant. The fact is the money went from SMSF account to his personal bank account, as far as how the personal money was used is not auditor's concern. However, the accountant disagreed and tried to treat as SMSF loss. The SMSF member is doing the legal proceeding to try to get the money. We'll wait to see the result of this legal matter.

THE AUDITORS INSTITUTE

Feb 20, 2023

Hi Jennifer

If I understand it correctly $26,000 was incorrectly take out of his SMSF bank account by a scammer.

My view would be to initially treat this as a debtor from an accounting viewpoint. If the money cannot be repaid to the Fund due to the loss of the money as a result of the scam then yes this would then be written off and a loss recorded.

Every effort should be made to have the money returned to the Fund's bank account so that the debtor amount is repaid.

Thanks

SMSF AAA

Jennifer Yu

Feb 20, 2023

Replying to

Thank you for your reply! Do we need to report this matter though?

THE AUDITORS INSTITUTE

Feb 21, 2023

Replying to

Hi Jennifer

If the $26,000.00 was repaid to the Fund based on my understanding of what has occurred there would be no reason to report anything to the ATO.

A scam query was raised in the forum last week & the main issues that maybe relevant to your example are noted below.

If it is a first year Fund or if it is a material breach this may have an impact on the audit report you issue & whether an ACR (audit contravention report) is required.

If the amount involved was material and you did not have sufficient documentation re the scam you may need to issue a disclaimer of opinion in your financial audit report. As an example:

"We have been advised the Fund Trustee has been scammed and as a result, has lost all of its (or part of its) assets. Although the Trustee has informed us of the background information to this scam, we are of the view that we do not have sufficient evidence of the scam occurring. Hence, we provide no opinion on the Fund (or part of its) assets."

Re if there has been a compliance breach I would consider if there has been a breach of SIS Reg 4.09 (investment strategy) or SIS Reg 8.02B (assets at market value).

In the scam example I was involved in the ACR was lodged re Reg 8.02B that stated:

"We have been advised the Fund Trustee was involved in a fraudulent scam resulting in the loss of ... assets ........ As we have not received sufficient audit evidence regarding this scam it is difficult for us to provide an opinion on the market value of the Fund's assets."

If there has been a contravention of SIS that is considered unrectified the trustees should consider voluntary disclosure to the ATO using the form at:

https://www.ato.gov.au/assets/0/104/2244/2335/cad3fc43-b044-47b5-8176-1ba8706417bb.pdf

Thanks

SMSF AAA

Jennifer Yu

Feb 21, 2023

Replying to

Excellent! Thank you!