Self-managed superannuation funds (SMSFs) provide a platform for people to control and invest their superannuation, subject to rules contained in Australian legislation. But with no requirement for trustees to complete mandatory training or hold a professional qualification, a large number of funds are essentially run by mum and dad investors who are subject to serious civil and criminal penalties and significant tax consequences if any of these rules are breached.
The combination of having complete control of superannuation benefits in their capacity as trustee, the potential lack of required knowledge and the amount and complexity of the relevant rules often gives rise to breaches of those rules without malice or ill intent. There are also instances where trustees deliberately breach the rules with disregard to potential consequences. SMSFs are regulated by the Australian Taxation Office (ATO).
The Superannuation Industry (Supervision) Act 1993 and the Superannuation Industry (Supervision) Regulations 1994 impose various restrictions on SMSFs dealings with related parties. Such dealings range from the simple to the complex and it is incumbent on the auditor to identify where breaches occur.
For each year of income trustees of SMSFs are required to appoint an approved auditor to give the trustees a report, in the approved form, of the operations of the fund (the audit report). Section 129 of the SIS Act places an obligation on the auditor to report certain matters to the trustees and also to the ATO.
In her paper titled ‘Related Party Transactions: The Role and Responsibility of the SMSF Auditor‘, Sharlene Anderson (Director, Veritas Corp) examines a range of related party transactions, and discusses how auditors can identify whether a transaction is with a related party and whether a breach of the governing legislation has occurred.
This paper, along with 3 other in a series, are all available (free of charge) by registering for them through the CaseWare SMSF Audit website: www.casewaresmsfaudit.com.au
Sharlene Anderson is a Registered Company Auditor with significant experience auditing across various legislative frameworks including SMSFs. Sharlene often acts as the appointed representative for various professional bodies in relation to SMSF regulation and practice, providing consultation to stakeholders and regulators including the ATO and ASIC.
Sharlene is also a member of the National Quality Review Advisory Committee for CPA and has extensive experience in compliance related engagements.
In addition to these roles, Sharlene is also the SMSF Audit expert and content provider for SMSF Audit, CaseWare’s powerful new cloud-based audit solution.
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