In a recent update, the ATO said that approved SMSF auditors should be checking the ATO’s disqualified trustees register when determining whether they need to report a contravention of section 126K of the Superannuation Industry (Supervision) Act 1993 (SISA), as part of their annual and ongoing reporting obligations.
Under section 126K of the SISA, a person commits an offence if they knowingly act as a trustee, or a director of a corporate trustee, of an SMSF while they are a disqualified person and are a trustee of an SMSF and does not notify the ATO in writing immediately if they are or have become a disqualified person.
“SMSF auditors are required to report contraventions of section 126K of the SISA to us via an auditor/actuary contravention report (ACR),” the ATO said.
“They also need to notify the trustee(s) of the contravention in writing and modify Part B of the SMSF independent auditor’s report (compliance audit).
“Our records show some SMSF auditors have not lodged an ACR reporting a contravention of section 126K of the SISA, even though an individual is recorded on our disqualified trustees register.”
The disqualified trustees register should be checked by SMSF auditors to see if an individual has been disqualified, according to the ATO. The register is updated quarterly and includes all individuals who have been disqualified since 2012 (when this information was first published electronically).
“We expect SMSF auditors to check this register each year during the annual audit for all new and continuing audit engagements,” the ATO warned.
Auditors should also consider checking the Australian Financial Security Authority’s National Personal Insolvency Index and Bankruptcy Register Search for insolvency and bankruptcy information.
Furthermore, ASIC’s register of banned and disqualified persons should be reviewed for details of persons who have been disqualified from involvement in the management of a corporation.
This comes as the ATO had also recently clarified the need for auditors to report correctly in the designated sections in the audit/actuary contravention report for SMSFs.
