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Changes to the Legal Profession Regulation

Our director James Kenward attended a training course held at the Institute of Public Accountants last month aimed at external examiners. There are some changes to LPR2017 which commenced in September 2017 and will be applicable to the upcoming March 2018 trust account year-end examinations. 

These were the key points flagged by Bill Hourigan, Manager, Trust Account Investigations, within the Professional Leadership Department of the Queensland Law Society.

S.29(1) Keeping and printing trust records

Reconciliations and other documents can now be printed to pdf or be scanned and kept in a ‘printable’ format. A critical issue to consider here is that it must be clear when the document was produced to demonstrate that it was prepared within 15 working days of the month end. 

S.44(3) Reconciliation of trust records

QLS had the view that principals were failing to follow up reconciliation differences, as a result, there is now a requirement for the principal to annotate the reconciliations to evidence their review.

S.50(2) Withdrawal of controlled money

The new regulation states withdrawals from controlled money can only be by cheque or electronic funds transfer (EFT guidelines would apply). Bill indicated this was a ‘touch up’. This means that payments from controlled money cannot be made via cash withdrawals, ATM withdrawals or transfers, telephone banking withdrawals, BPAY Payments or direct debit (OSR/PEXA excluded). 

S.51(9) Register of controlled money

Monthly reconciliations of controlled money are to be reviewed by the principal & annotated as such.

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ATO Issues Update on Cryptocurrency Compliance Traps

On March 19, the ATO released further details on some of the regulatory considerations of cryptocurrency for SMSFs including valuations in particular contributions and ownership of assets. 

The compliance issue exists where SMSF transacts in cryptocurrencies and SMSF trustees and members should be aware of the tax consequences that could occur with cryptocurrencies and keep records of all transactions for regulatory considerations.

Compliance tips outlined by the ATO for cryptocurrency transactions for SMSFs include:

Investment strategy and trust deed
The investment must be allowed under the fund's trust deed, be in accordance with the fund's investment strategy and comply with SISA and SISR regulatory requirements. 

Ownership and separation of assets
SMSF cryptocurrency investments must also be held and managed separately from the personal or business investments of trustees and members.

SMSFs must ensure their investments in cryptocurrency are valued in accordance with ATO valuation guidelines.

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Common 'Stuff ups' Persist in SMSF Compliance 

In a recent article from the SMSF Adviser, it's been found that the ATO's chief compliance concerns continue to centre around the same mistakes re-occurring year in and year out. 

The common compliance issues are causing a knock on effect for the ATO with the stand out issue being the failure to lodge on-time being the headline item on the ATO's compliance watch list. 

The ATO continues to focus its compliance resources on auditors who prepare SMSF accountants and statements for SMSF that they audit with 92 auditors to be further scrutinised due to their role acting as both tax agent and SMSF audit for their client. 

Auditor independence has been a recurring theme for the ATO over recent years, yet many firms have found it difficult to separate their auditing work from their tax agent and related advice wit SMSF clients. 

Trouble spots for the ATO compliance team include:

- Insurance of collectibles (which should be in their fund's name)
- Storage or display of the collectable not being at the premises of the related party
- Death benefit nominations including trust deed completion 

See original article here.

Fair Work Ombudsman Uses Accessorial Liability Laws Against Accounting Firm 

The Fair Work Ombudsman has used accessorial liability laws to obtain penalties against an accounting firm for knowingly assisting one of its clients to exploit a worker. 

Victorian firm Ezy Accounting 123 Pty Ltd was penalised over $50,000 last year after the Federal Circuit Court found the firm to have facilitated underpayments by its client to two employees, both Taiwanese workers. 

The penalties were imposed by the Federal Circuit Court after Ezy Accounting 123 Pty Ltd's client Blue Impression, admitted to underpaying two staff members in one of its Japanese fast food restaurants in Melbourne between 2014 and 2015. 

Both the workers were in Australia on 417 working visas when the underpayments took place and were being paid under the minimum award wage. The workers were also refused a clothing allowance, penalty rates or other entitlements under the award. 

The Fair Work Ombudsman is working to protect vulnerable workers and is increasing the maximum penalties for misconduct including deliberate exploitation of workers and false records on behalf of both the external business adviser and the employer themselves. 

See original article here

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