Trust accounting and independence

Discussion in 'Accounting & Tax' started by Joe Davola, 28th Aug, 2017.

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  1. Joe Davola

    Joe Davola Member

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    Can an accountant do his own tax returns for the trusts that he is a beneficiary to or does it require an independent accountant?
     
    Joe Davola, 28th Aug, 2017
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  2. Simon Hampel

    Simon Hampel Founder Staff Member

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    You can do your own tax returns (personal and/or business), so I don't see why an accountant couldn't do his.

    It would be up to the trustees to determine who is the most appropriate person to do the tax returns - if there is a concern about the independence of the accountant, then simply choose another one.

    SMSFs are a little different because they need to be audited by an independent auditor.
     
    Simon Hampel, 28th Aug, 2017
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  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Depends on the terms of the trust deed.
     
    Terry_w, 28th Aug, 2017
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  4. Ross Forrester

    Ross Forrester Well-Known Member

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    If an accountant is preparing financial reports for an entity and the accountant is not independent the compilation report issued by the accountant needs to disclose this - you can refer to APES 315 para 3.5

    This varies depending on the professional association the accountant is connected to - some accountants are not part of a professional association or the association is a third tier body that simply has no enforcement.

    If an audit is being done then clearly the answer is no.
     
    Last edited: 28th Aug, 2017
    Ross Forrester, 28th Aug, 2017
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  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The only strict legal bar to trusts and professionals who can complete the work is a SMSF (which is also a trust). An accountants / tax agent / auditor cannot conduct the audit for their own SMSF or that of a Part 8 associate. The ATO tax ruling on contributions (TR 2010/1) even specifically allows the accountant to do the tax and accounts work - for free!!...The audit is the key problem The reason - Super law says it is an independent audit report.

    The ATO also take a dim view to the same firm doing the audit and a independent auditor is best used.

    From a legal perspective there may be good reasons for an accountant NOT to prepare financials if they are a trustee and others rely upon the financial information eg arms length beneficiaries. It depends on what the deed says and what the trustee must do. I know I have seen deeds that specifiy who is to audit and how trust assets and proceeds are to be held by a custodian. In a strict legal sense the trustee must always consider the beneficial interests above their own interests anyway. Breach of trust obligations arent a PI issue in any event.

    If there is a concern best to seek legal advice on the risks and then the PI insurer may need disclosure to ensure liability is limited or covered to some degree. The acts of a trustee / trustee Director however wouldnt normally be covered as the practice is not generally a trustee - The person may be.
     
    Paul@PAS, 28th Aug, 2017
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