SMSF auditors must address and take greater notice of compliance issues at the start of the audit process, as many practical problems were still occurring regularly, according to a leading SMSF auditor.
“As much as things are getting easier and better in terms of documentation in limited recourse borrowing arrangements (LRBA), for example, we’re still getting lots of problems,” Super Sphere director Belinda Aisbett said at the SMSF Professionals’ Association of Australia National Conference in Brisbane yesterday.
“We’ve got one client that refers work to us and every one of their LRBAs fails the requirements, even though they have one of the big four banks as one of their financiers – the documentation just does not stack up.
“So notwithstanding things should be on the improve, we still, as auditors, need to be really vigilant to make sure we are checking everything and not just assuming that if a large bank is involved, everything should be okay because that’s doing ourselves and our clients a disservice.”
The investment strategy was another example of one of the areas that was still overlooked, Aisbett said.
“Is it a permitted asset class?” she said.
“You might have a perfectly compliant LRBA and then you get to the investment strategy where property is 0 per cent.
“It clearly needs to allow that and I know it’s very basic, but these are the sorts of things auditors tend to lose sight of – those basic things do need to be covered off.”
In addition, she said in the past six months, there had been more issues surrounding SMSF definitions than she had ever experienced in the past.
