Evidence of investment review key to audit

SMSF investment strategy

Auditors will look for evidence trustees have reviewed their SMSF investment strategy in light of the significant events of 2020, an audit expert says.

Trustees will need to provide evidence they have considered the impact of the significant events of 2020 on their SMSF investment strategy even if the strategy ultimately remains unchanged, an SMSF audit expert has said.

BDO Australia partner Shirley Schaefer said auditors would look for evidence trustees had reviewed the investment strategy for their fund in light of the significant events, including bushfires and the COVID-19 pandemic, that had taken place during 2020.

“Clearly, we’ve had some significant events. What is really critical is the need for trustees to evidence that they have considered the impact of these events on their investment strategy,” Schaefer said today at the SMSF Association Technical Day 2020.

“From an audit perspective, we need evidence that they’ve reviewed it.”

She also pointed out evidence of a review would be essential even if trustees decided against making any changes to their investment strategy despite the impact of recent events.

“[The investment strategy] may not need to change. The overarching strategy may well be appropriate and the trustees may well want to stay the course. But it certainly needs to be re-evaluated and there needs to be evidence of that,” she said.

She noted a fund’s investment strategy would need to be updated if the strategy included specific asset allocations or if its asset allocations had changed.

Trustees would also need to update their fund’s investment strategy if new or different investments were made, she added.

In March, Super Sphere director Belinda Aisbett warned advisers the ATO’s expectations as to what an SMSF investment strategy should include exceeded the legal obligations imposed on trustees as defined by the Superannuation Industry (Supervision) Act.

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