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Auditors should check compliance of crypto assets
The ATO is warning SMSF auditors that if a fund invests in crypto assets, they must check that the investment complies with superannuation laws and regulations.
The regulator says that as part of an audit, the auditor should confirm that the investment is first permitted under the fund's trust deed and that it aligns with the fund's investment strategy. As part of this, the auditor must also assess whether the trustee has considered the risks and how the investment supports the member's retirement goals.
Furthermore, SMSF auditors must confirm that any cryptocurrency is held and owned by the fund and is stored in a digital wallet in the fund's name, separate from any crypto personally held by trustees or members. Finally, it is also important to ensure that it is reported at market value in the fund's financial statements.
Holding statements or investment summaries alone are not sufficient to confirm market value, and auditors must obtain additional objective, supportable evidence, the Tax Office said.
As an example, it said that an auditor can use the 30 June closing value published on the website of a crypto exchange that provides historical data. The auditor should also document the conclusions reached on the fund's compliance with these requirements in their audit file.
If the crypto is held by a custodian, such as an exchange, the auditor should obtain a Type 2 report if available and perform further substantive testing to confirm the holding statement is correct.
If an auditor can't verify the 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 material. When the reporting criteria apply, they should lodge an auditor contravention report for a regulation 8.02B breach.
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