Communication with trustees
Critical considerations for SMSF auditors
Communication with SMSF trustees
Disclaimer
Please note this presentation is to be considered as general advice
only. The opinions of the presenter should not be relied upon as
providing specific advice for you or your clients.
The information contained within this presentation is based upon our
understanding of the relevant legislation, regulations and other
materials as at July 2014.
Communication with SMSF trustees
Topics Covered
1.
What are the auditor’s communication requirements
2.
Situations requiring communication
3.
Implications for lack of communication
4.
With whom shall the auditor communicate
1. What are the auditor’s communication requirements
Communication with SMSF trustees
1. What are the auditor’s communication requirements
Whilst the auditor is required to form an opinion on whether:
(a) The financial report is free from material misstatement; and
(b) The trustees have complied, in all material respects, with the
specified requirements of the SISA and SISR.
Do the auditor’s communication responsibilities
extend beyond this?
Communication with SMSF trustees
1. What are the auditor’s communication requirements
The auditor’s communication responsibilities also include:
(a) Significant qualitative issues identified during the audit;
(b) Significant deficiencies in internal control; and
(c) Other matters of importance not presented in the financial report.
Refer page 4 of notes
What issues may fall under each of the above?
2. Situations requiring communication
Communication with SMSF trustees
2. Situations requiring communication
Refer examples on pages 5 to 10 of notes for issues that may require
the auditor to communicate issues or concerns with the trustees:

Example 1 – Trustee(s) history of paying non-fund expenses (p.5)

Example 2 – Non Lapsing BDBN (p.6)

Example 3 – Breach of trust deed requirements (p.7)

Example 4 – Private unit trust investments (p.8)

Example 5 – Investment strategy concerns (p.9)

Example 6 – Individual trustee vs corporate trustee (p.10)
Communication with SMSF trustees
2. Situations requiring communication
As an auditor, ask yourself this question
If you identify any concerns relating to the SMSF, whether or not the
concern results in a contravention or otherwise, and there exists the
potential for adverse consequences for the trustees / members, do
you believe the trustees / members would like to know about the
concerns?
If ‘Yes’ – Include in the management letter!
Why? If not for the fact you are looking after the interests of the
trustees / members - Australian auditing standards require you to!
Communication with SMSF trustees
2. Situations requiring communication
Additional matters of concern
In addition to the 6 examples discussed, what
other situations do you believe, if identified, may
require reporting to the trustees / members?
Communication with SMSF trustees
2. Situations requiring communication
When determining whether to communicate
a matter, consider the:
(a) Intended users;
(b) Frequency of the occurrence;
(c) Materiality of the issue; and
(d) The implications for not communicating.
3. Implications for lack of communication
Communication with SMSF trustees
3. Implications for lack of communication
Consider
1.
Shail Superannuation Fund v Commissioner of Taxation [2011]
2.
Triway Superannuation Fund v Commissioner of Taxation [2012]
3.
Tax and Superannuation Laws Amendment (2014 Measures No.1)
Bill 2014, 2014
Refer pages 11 - 15 of notes
Communication with SMSF trustees
3. Implications for lack of communication
For the 2 minutes required to include in a management letter you could
potentially save yourself from....
4. With whom shall the auditor communicate
Communication with SMSF trustees
4. With whom shall the auditor communicate
How many of you
(a) Communicate only with the fund’s accountant?
(b) Communicate only with one of the fund’s trustees?
Consider
Q. What are the potential consequences of
failing to communicate with all trustees?
Q. Is the auditor required to communicate with
all trustees?
Communication with SMSF trustees
4. With whom shall the auditor communicate
Australian auditing standard requirements
ASA 260 – Communication with those charged with governance
 The auditor shall determine the appropriate person(s) within
the entity’s governance structure with whom to communicate
 The auditor shall communicate with those charged with
governance significant matters arising from the audit.
How do you ensure all trustees receive your communication?
Conclusion – When in doubt tell the trustees
4. SMSF investments in overseas properties
Thank you