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.
Go for it ATO I don’t care!
Trustees are lambs to the slaughter with this stuff. They have no idea what Crypto is, or what it isn’t more to the point! They are only doing it “because everybody else is” and they are afraid of missing the boat.
For every success story, I can show you a hundred disasters, who have realized capital gains, reinvested, lost the lot and now cant even pay the ATO. Yet, they (or their smart alec lawyer) are the first ones to turn around and blame the accountant or auditor. Ever see a SMSF go into liquidation? I have!
Cryto exchanges aren’t audited, and until that is compulsory, NO (REPEAT, NO) SMSF auditor in Australia should be signing off on this crap! That doesn’t even begin to address the market value issues.
I have made a practice decision to not accept/move on clients who use their SMSF to invest in crypto (I use the word “invest” loosely).
If you want to gamble, go the casino, its quicker and tax free.
I ain’t interested!