The ATO has reminded auditors servicing SMSFs holding cryptocurrency to ensure investments in these assets are compliant with retirement savings rules and regulations and has issued some guidelines to assist their processes.
“If a self-managed super fund invests in crypto-assets, the approved SMSF auditor must check that the investment complies with superannuation laws and regulations,” the regulator stated.
To this end, it stipulated auditors must confirm cryptocurrency investments are permitted under the fund’s trust deed and are aligned with the SMSF investment strategy. Additionally, the audit must reflect the trustee or trustees have shown they have considered the risks and how the investment supports the retirement goals of the fund members.
Further, the ATO confirmed auditors need to confirm the investment is held and owned by the SMSF, that is, it is stored in a digital wallet in the fund’s name and is separate from any cryptocurrency personally held by trustees or members. It must also be established that the holding is reported at market value in the SMSF’s financial statements.
“Holding statements or investment summaries alone are not sufficient to confirm market value. You must obtain additional objective, supportable evidence,” the ATO warned.
According to the regulator, this evidence can take the form of 30 June closing values published on the website of a cryptocurrency exchange that provides historical data. It said auditors must also document the conclusions they reached on the fund’s compliance with its requirements in their audit file.
“If the crypto is held by a custodian, such as an exchange, you should obtain a Type 2 report if available and perform further substantive testing to confirm the holding statement is correct,” the ATO indicated.
In addition, it emphasised if an auditor cannot verify a crypto-asset exists, belongs to the fund or is reported at market value, they must qualify both Part A and Part B of the audit report if the investment is considered material.
The ATO noted practitioners may also need to lodge an auditor contravention report for a breach of Superannuation Industry (Supervision) Regulation 8.02 if the digital holdings are not reported at market value.
