Havoc for Self-Managed Superannuation FundsAugust 30, 2018
Peter Landers, the Principal at Peter A. Landers & Co believes the Federal Government’s plan to increase the Self-Managed Superannuation Audit Cycle to three years will be a total disaster and needs serious consideration by the new Federal Treasurer, Josh Frydenberg and the new Assistant Minister for Treasury and Finance, Zed Seselja.
The intention by their predecessors to reduce ongoing costs could well have the reverse effect where there is any breach in an SMSF Fund.
If a breach occurs in a year where the audit is not conducted and there is two more years before the audit than this could result on the Fund being in breach for over four years before being detected by the appointed auditor. Such breaches could be resolved if the audit is conducted annually, especially where such a breach is in relation to in house asset rules where the breach becomes greater in value each year to the point of escalating from a minor breach to a Reportable Contravention.
The three year cycle will make the whole concept far more complex and result in higher costs for the trustees of the Funds whenever there is an issue which could have been easily addressed in an annual audit process.
The actual nature of audits results in the financial information being reviewed on an annual financial reporting period and thus an audit completed on a three year cycle will still require the examination of data on an annual basis.
The end result of this intention is that the only real effect will be a change in the timing of audit reports but the cost and complexity will not be reduced and the process will become more complex and harder to interpret for the trustees and members of the audited funds.
There are always ongoing issues that may impact your fund that you may or may not be aware of. If you have any concerns please feel free to contact us at Peter A. Landers & Co on 03 5229 0779, where we have specialist SMSF auditors who are happy to address your issues.