Business News

Trustees take heed of audit warnings

SMSF trustees were listening to the guidance given to them around potential or identified breaches during the audit process, according to an audit specialist.

“We’re not seeing increases in governance breaches at all,” Baumgartner Superannuation senior consultant Chris Malkin told the 2015 Self-Managed Independent Superannuation Funds Association SMSF Forum in Melbourne last Friday.

“I audit a lot of very large funds as well and similarly, with all the provisions that APRA put in over the last few years in respect of governance, risk management and risk mitigation [et cetera], trustees generally are taking heed of what the advice is.

“Also, generally, all the advice is being taken notice of – the trend is up, as far as audit advice is concerned.

“So if we bring to the attention of the trustee that there’s a likely breach about to happen or that could happen or has happened, and we come to some arrangement as to how to rectify that breach, generally the trustees will rectify it and it won’t reoccur in the following years.

“So we can see that most people are trying to do the right things by their funds.”

Malkin said the trend was that most trustees were trying to do right by their funds.

“And of course they’re scared of the penalties from the ATO if they don’t do the right thing,” he said.

In-house asset breaches were becoming more serious but were not increasing in volume, he added.

However, repeat audit queries were not decreasing.

Malkin also revealed the issues in relation to “problem trustees” were the same every year.

“If we see that their fund is being used as their personal bank account and they breach during the year, rectify it before 30 June, then breach on 1 July et cetera, those same sorts of trustees and problems reoccur every year,” he said.

“There’s just no change, and these guys are just playing the game.

They have been getting away with it to a large extent because we might raise an auditor contravention report, for example, about a breach, but the ATO then has to have the resources to do something about it, but generally those resources have been decreasing, not increasing.”

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