SMSF auditors are mainly reliant on trustee representation letters when determining the whether an individual has been disqualified from holding this type of position, with information on the ATO register lagging and notification messages hard to track, according to an audit firm.
ASF Audits head of education Shelley Banton said the issue of the status of individual and corporate trustees was recognised by auditors as no statutory time period applied to reporting breaches of section 17A of the Superannuation Industry (Supervision) Act, which states an SMSF cannot have trustees who are disqualified persons.
Banton added that once a fund no longer meets that definition, it must be reported, but auditors at present are having to rely on trustees self-declaring they are not disqualified.
“The ATO publishes a trustee disqualification register which is publicly available and includes all the details of disqualified trustees. A formal notice of disqualification is also published in the Commonwealth Government Gazette,” she said in a blog post on the ASF Audits website.
“The unfortunate reality is that the register is not up to date. The most recent list includes all disqualifications processed to 31 December 2022, with the next update scheduled for May 2023, not released at time of writing, covering disqualification action taken to 31 March 2023.
“While SMSF auditors are notified about disqualified trustees directly by the ATO for recently audited funds, keeping track of the notifications is impossible.
“Combine this with a delayed register of names and most SMSF auditors rely on the trustee representation letter. There is no other practical way to ensure a trustee is not disqualified.”