A recent Administrative Review Tribunal (ART) case has emphasised a title search is the prime document SMSF auditors should rely on to prove ownership of an asset even if other evidence is also available, a sector specialist lawyer has noted.
DBA Lawyers special counsel Bryce Figot said proof of ownership was a key issue in the case of Murphy and ASIC [2025] ARTA 76, heard on 6 February, where it was claimed Terence Murphy, an approved, but since disqualified, SMSF auditor had not properly checked the ownership of an asset.
Figot pointed out Murphy disagreed with the Australian Securities and Investments Commission (ASIC) on this point, stating there was a rates notice and financial loan activity statement addressed to the corporate SMSF trustee and a rental agent statement addressed to the fund, all in relation to a property on Brisbane’s southern outskirts.
“Are those three things enough to support a conclusion that the fund did own the property?” he asked during a recent webinar held by the legal firm.
“Murphy contended that together the three documents were more than sufficient to prove ownership.
“Obviously ASIC disagreed, but Murphy said he rejected its conclusion as it showed a lack of ‘understanding of probability and audit judgment on these three documents. Maybe attack one, but together as three, it leans strongly to ownership. I dismiss ASIC concerns on the grounds it ignores cumulative proof’.
“If you look at the Australian auditing standards about evidence, it does talk about the cumulative nature of evidence, so his argument was not without its appeal.
“Yet, even with those three pieces of evidence, ASIC said it was insufficient. It went to the ART and they said it was insufficient.
“What should an auditor have [in this case]? A title search, and you should be doing a title search anyway, due to Superannuation Industry (Supervision) Regulation 13.14.
“If you are not an auditor, but deal with them directly or indirectly, and have an auditor who starts performing lots of title searches each single year and disbursing the client, does that mean it’s an annoying auditor?
“It means they are probably a good auditor. I would be more worried about an auditor who doesn’t do that because the auditor has to check each year to make sure there are no charges [over the asset] anyway.
“So this is very relevant because it’s an issue which does affect lots of different funds.”
