New accounts time frames may spark document backdating

records time frame backdating

A Treasury proposal to impose a set time for the preparation of SMSF accounts may lead to funds backdating records to meet the deadline.

Moves to require SMSFs to have prepared their accounts and statements more than six weeks before they are lodged have raised concerns fund trustees may start backdating those records to meet the proposed time frame, an SMSF expert has claimed.

The new time frame is part of current consultation being conducted by Treasury, which is proposing to add a new regulation to the Superannuation Industry (Supervision) (SIS) Regulations 1994 where accounts and statements must be prepared at least 45 days before a fund lodges its SMSF annual return (SAR).

Currently, no time is prescribed by the SIS Regulations, and the day on which preparation of the records must be completed would also become the day on which an approved SMSF auditor must be appointed to the fund.

SmarterSMSF chief executive Aaron Dunn said the proposal, which is part of a range of miscellaneous amendments put out for consultation by Treasury, was a “significant shift in the reporting obligations for SMSFs”.

“To say this has come from left field would be an understatement,” Dunn said in a post on his website, noting the amendment would apply to all funds, but would create difficulties for those funds required to report in the first part of a new financial year.

“With different lodgement dates that apply for SMSFs, this 45-day period could mean in some instances that some financial statements would need to be finalised by 16 September, less than three months after the end of the financial year.

“Some funds would necessarily have all the fund information available to complete their financials by this stage, potentially awaiting tax statements or details of distributions from other trusts.”

He pointed out funds with lodgements up to date would have to finish preparing their records and appoint an auditor by 31 March to meet a 15 May SAR lodgement deadline.

First-year funds would need to meet the 45-day time frame by 14 January to lodge their SAR by 28 February, while late lodgers and some other first-year funds would need to finish preparing their records and appoint an auditor by 16 September to meet a 31 October SAR lodgement deadline.

“Such a decision to impose this measure could arguably lead to trustees backdating the signing of financials to ensure compliance, something that doesn’t serve the trustee or regulator any type of satisfactory outcome,” Dunn said.

He also pointed out that failing to meet the proposed 45-day time frame could lead to administrative penalties of 10 penalty units or $2220 each for individual trustees or $2220 for directors of a corporate trustee.

“This certainly seems excessive in the context of the fund’s due date for lodgement of the SMSF annual return still 45 days away. Even more so when you consider that an auditor is required to provide an audit report to the trustees within 28 days of having received all relevant [documentation] to undertake the audit.

“To look to apply administrative penalties in such a scenario when the commissioner can already impose ‘failure to lodge’ penalties seems extreme.”

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