We’ve had a cracking start to 2023. Effective from late 2022 all auditing firms, including us, must comply with the new Auditing Standards AQSM1.
I won’t thrill you with the details (though if you want a page-turner go here) but it does mean even greater vigilance than ever on auditors.
Which means we will be more demanding about documentation and supporting evidence. And if it’s not provided, everything will slow down.
Start forewarning your trustee clients now.
To reinforce the government stance ASIC has just deregistered another 374 SMSF auditors.
The current biggies
Two biggest issues coming through right now:
1. The difficulties with crypto currencies
The biggest issues arising with crypto are:
- Diversity and Advice
The high percentage of total assets that many trustees have allocated to crypto currencies. It brings into question their investment strategy. And the level of advice they are receiving. Whilst it is caveat emptor, there could be some damaging train wrecks ahead in the world of trustees.
- A lack of documentation
It can be hard to ascertain the existence, ownership, and valuations of these assets. Especially if trustees are using non-mainstream wallet providers. Expect to see kick-back from auditors who will demand better supporting documentation.
2. Non-arms length transactions, especially with property
This is on continuous repeat: it is that monotonous and ever-present. Yet still little changes.
Where an SMSF rents out a property to a related third-party, the ATO want to see clear, documented evidence that the third party is being treated on commercial market terms.
The ATO recently raised the penalties for trustees in breach of the SIS Act – so be warned. They are getting impatient.
The final one, which I will go into more detail next time, is that due to the inflationary pressure last quarter the Transfer Balance Cap will lift to $1.9M effective 1st July 2023.
Could be useful for some of your clients.