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ATO, Auditing

ATO to tell auditors about disqualifications

ATO SMSF auditors disqualification

The ATO will inform SMSF auditors of the disqualification of trustees or directors of a corporate trustee, but has urged them to review the status of all clients.

SMSF auditors will be informed by the ATO of the disqualification of a trustee or director of a corporate trustee of one of their SMSF clients but have been encouraged to also verify the status of new and existing clients on a periodic basis.

The ATO stated the notification to SMSF auditors regarding the disqualification of a trustee or director will be sent by email to the SMSF auditor reported in the fund’s most recent SMSF annual return, which is the same email address provided to the Australian Securities and Investments Commission (ASIC) via its Regulatory Portal.

As such, auditors are required to keep email contact details up to date and advise ASIC of changes, but also to report the status of any trustee who can no longer act as a trustee.

“If you find a disqualified person is continuing to act as a trustee – in contravention of section 126K of the Superannuation Industry (Supervision) (SIS) Act – you must report this contravention on an auditor/actuary contravention report,” the regulator stated in an update on its website.

“Do not rely on our email notifications as the only source of information about disqualifications. To ensure the disqualification of your SMSF client is still active, check our Disqualified Trustees Register.

“You should verify all new trustees yourself using the Disqualified Trustees Register and make periodic checks on your existing clients.

“Auditors should also check whether trustees have been disqualified for other reasons, such as they are insolvent, under administration or have been convicted of an offence involving dishonesty.”

Changes to insolvency laws within the Corporations Act in December 2021 moved the issue of the disqualification of trustees or directors of a corporate trustee closer to the SMSF sector as additional changes were also made to the SIS Act.

Under these changes, where a restructuring practitioner is appointed in an insolvency event, the corporate trustees of a superannuation entity, including an SMSF, could be disqualified from managing that entity.

The changes will also require the trustees or directors of a corporate trustee to declare each year they, and any new trustees or directors, are not disqualified and to include a statement to that effect in their year-end documentation.

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