Auditor flags common SMSF audit issues with crypto

In most cases, Ms Schaefer said SMSFs are only investing smaller amounts in their funds, although there are some funds with more substantial amounts.

Where SMSFs invest in this asset class, it's vital trustees understand what the requirements are for owning these types of assets in an SMSF, she said.

“I do worry that some people dabble in things inside super because they can without recognising that there can be extra risks if they don’t keep an eye on things and do them properly,” she cautioned.

Some SMSF trustees, for example, don’t understand the importance of the wallet being in the name of the super fund, which is important for ensuring that the assets of the super fund are kept separate, she explained.

Ms Schaefer said she has come across instances where SMSF trustees have had their wallet stored on a USB flash drive.

“It wasn’t on an online account, which meant that there was no ownership or way of verifying who it belonged to. It was whoever had custody of the [USB flash drive] and the password,” she said.

Some funds have also encountered some challenges from a record keeping perspective, she said.

Depending on what platform the SMSF trustees are using to invest in cryptocurrency, Ms Schaefer said in some cases it can be difficult to obtain data on the investments if this information wasn’t collected on 30 June or soon after.

“It's all online and it's all instantaneous, so if clients don't get their reports down on the 30th of June or shortly thereafter, the data can potentially be lost,” she said.

“It depends a lot on what platform you’re on and how you’re using it. Every service provider does it differently.”

Ms Schaefer said it is also important that trustees recognise that cryptocurrency is still a completely unregulated market.

“Whilst I’m not a big fan of over-regulation, trustees do need to acknowledge that there’s increased risks and I’m not sure if some trustees understand that, to be honest,” she said.