SMSF auditors dealing with trustees who refuse to sign essential fund documents must emphasise this is a legal requirement and ongoing failure to comply will lead to the matter being escalated to the ATO, according to View Legal director Matthew Burgess.
The specialist lawyer made the comment in regards to the issue of when two SMSF trustees, such as a husband and wife, are in dispute and one refuses to sign the end-of-year financial statements and auditor engagement letter, and whether that would create a breach that should be flagged in part B of an independent auditor’s report.
“I would say yes [to this question] because you have to flag it in some way,” Burgess said during a recent presentation hosted by The Auditors Institute.
“I am assuming there is some other wider issue going on with the relationship between the spouses, and their legal advisers might need to start overlaying what the family law outcome is going to be, so this might only be a one or two-year situation where one of the spouses is being unhelpful or refusing to sign things.
“If it is an ongoing issue, I would be absolutely escalating that because the [Superannuation Industry (Supervision) Act 1993] rules are quite clear that all the trustees need to be signing [fund documents].
“I don’t want to sound judgmental, but it is not a great position for the person, whichever spouse it is, that is refusing to sign stuff.
“It is not a great position for them, just on first order principles from a trust law perspective, and regardless of the SMSF rules, you don’t want to be in a situation where you are actively abrogating your responsibilities as a trustee.
“There are key obligations and duties that trustees have and I would say that ongoing refusal would be breaching one of those duties.”
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason