HolzlawPowerpoint2010 Audits Whatsthebigdeal

Holzworth Law & Assoc. : 

Holzworth Law & Assoc. 2010 Superannuation Update AUDITS Holzworth Law & Associates

What’s the big deal about Audit : 

What’s the big deal about Audit Growing Areas of Concern : Bank Overdrafts Unauthorised Accessing of Funds Financial Assistance Residency Accumulation, Pension and Now Both.

What’s the big deal about Audit : 

What’s the big deal about Audit Growing Areas of Concern : Verifying Assets Valuing Assets Installment Warrant Debt Trust Deeds/ Investment Stratagems

What’s the big deal about Audit : 

What’s the big deal about Audit Bank Overdrafts It is becoming common that Trustees do not leave enough money in their bank accounts to meet all the expenses, including automatic payments like Bank Charges. An overdraft, no matter how small or only for a day amounts to a “borrowing” and contravenes S 67.

What’s the big deal about Audit : 

What’s the big deal about Audit Bank Overdrafts This is a mandatory reportable event on what is known as a “contravention report” with the ATO. If the overdraft is seen to be permanent or commonly used, the breach will become very serious and compliance may be lost.

What’s the big deal about Audit : 

What’s the big deal about Audit Unauthorised Accessing of Funds In general terms, if a member of a SMSF satisfies a “condition of release” they can gain access to their SMSF members account. There are a number of “conditions of release”. Not all are linked to our preservation age when we can gain access to our benefits due to age.

What’s the big deal about Audit : 

What’s the big deal about Audit Unauthorised Accessing of Funds Some of the other methods of gaining early access to benefits relate to serious and terminal illness, compassionate grounds & severe financial hardship. If you do not meet a condition of release, you are NOT permitted early access to your Super.

What’s the big deal about Audit : 

What’s the big deal about Audit Unauthorised Accessing of Funds Some typical breach’s I am seeing : Taking a loan, even if it is paid back. The SMSF buying some Asset from you. The Fund paying personal expenses. Fabricating expenses and seeking unauthorised re-imbursement.

What’s the big deal about Audit : 

What’s the big deal about Audit Unauthorised Accessing of Funds Investment into Assets that do not exist with the money diverted back to the members. Assets sold and the sale proceeds not deposited into the SMSF bank account. Assets wrongly scrapped in the books but sold privately by the Trustees and the money kept.

What’s the big deal about Audit : 

What’s the big deal about Audit Unauthorised Accessing of Funds Going on a trip to inspect the Assets and taking the family along for the holiday. Mortgaging or allowing the Assets to be charged as security for a private loan. I could go on… Don’t get any ideas !!! If you are in financial strife, contact me and lets see what can be done legally.

What’s the big deal about Audit : 

What’s the big deal about Audit Giving Financial Assistance The Fund is not permitted to give financial assistance not only to members but also a “relative”.

What’s the big deal about Audit : 

What’s the big deal about Audit Giving Financial Assistance There are 2 limbs to consider the definition of a relative. A parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child or spouse.

What’s the big deal about Audit : 

What’s the big deal about Audit Giving Financial Assistance Relative also includes another person, whether same sex or different with whom there is a relationship or another person who may not be legally married but lives with the person in a genuine domestic basis in a relationship as a couple.

What’s the big deal about Audit : 

What’s the big deal about Audit Giving Financial Assistance This is a list of common ways I am seeing trustees giving financial assistance : Giving of loans Buying Assets and leasing them out ( Car) Paying inflated prices for services from the relative (Repairs and Lawn mowing) Allowing Assets of the Fund to be used by the relative ( rental)

What’s the big deal about Audit : 

What’s the big deal about Audit Residency With Trustees now travelling for work overseas, the “resident regulated Fund” issues can become an issue. Failing this has serious tax implications, so see me as part of your due diligence before accepting these postings.

What’s the big deal about Audit : 

What’s the big deal about Audit Residency With Trustees now travelling for work overseas, the “resident regulated Fund” issues can become an issue. Failing this has serious tax implications, so see me as part of your due diligence before accepting these postings.

What’s the big deal about Audit : 

What’s the big deal about Audit Residency The big tests are : Central Management Control Active Member & Residency If you fail any one of these tests at any time, then you may loose your compliance.

What’s the big deal about Audit : 

What’s the big deal about Audit Accumulation, Pension or Both modes Due to the GFC, many retirees are now back in the workforce. Funds are changing their status. Several member accounts TRIS Costs increase

What’s the big deal about Audit : 

What’s the big deal about Audit Verifying and Valuing Assets Annual verify the Assets exist. Verify their value by independent source. Verify the Assets use, storage, insurance and it is free from mortgages and guarantees. Issues with collectables and verification and valuation.

What’s the big deal about Audit : 

What’s the big deal about Audit Installment Warrant Debts Most difficult in law. To ensure compliance with Sect 64, I must have a signed statement from the financial adviser to that effect. No statement will require me then to seek a legal opinion and this will add to costs.

What’s the big deal about Audit : 

What’s the big deal about Audit Trust Deeds & Investment Stratagems Trust Deeds must reflect current legislation. They are audited against this. Hence, as laws change, I look at the deed to ensure it is current. No need for investment stratagems to show percentage ranges any more.

Summary : 

Summary The audit scope is ever expanding. The need for minutes and 3rd party verification is on the increase. Before you do anything you should not, talk to Scott, Heather or myself. Contravention reports are not the end of the world, but care need to be taken to ensure compliance is not lost. Holzworth Law & Associates