Backdating concerns may be unfounded

SMSF document backdating

Advisers may be too concerned about backdating and being in breach of the Financial Adviser Standards and Ethics Authority’s Code of Ethics.

Advisers with concerns regarding the preparation of a fund document relating to a previous decision should not assume the practice involves backdating and is unethical in every case, an SMSF technical expert has said.

Heffron technical services manager Leigh Mansell said preparing documents after the event was common in the SMSF industry and advisers worried about breaching the Financial Adviser Standards and Ethics Authority’s (FASEA) Code of Ethics when faced with new documentation relating to an earlier decision may be unduly concerned in many cases.

“I don’t think we are backdating most of the time,” Mansell said during the Heffron Super Intensive Day 2020 today.

“In many cases, the client’s not backdating anything. Perhaps they actually made a decision back on the 1st of July to start a pension, they just haven’t done the documentation yet.

“I think that’s very different to making a decision today in relation to something that actually occurred six months ago. Maybe it’s subtle, but I think it’s very different.

“Documenting something today that I had actually decided upon, that’s no problem at all ethically, but making a decision now in relation to a past event, I think that’s a problem.”

In addition, she noted advisers who followed the code should not find themselves in a position where they were unaware of a previous decision by the fund, as keeping a complete and accurate set of records was a key FASEA requirement.

“Realistically, you would expect an adviser would have sufficient records on file anyway,” she pointed out.

“We do hear people talking about backdating and I argue that I don’t think you are backdating, not if you’ve already made the decision. You’re just ratifying that decision formally on paper now.”

Earlier this week, Smarter SMSF chief executive Aaron Dunn said a recent move to require SMSFs to have prepared their accounts and statements more than six weeks before they are lodged had raised concerns fund trustees may start backdating those records to meet the proposed time frame.

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