.png)
Hi
I am currently conducting an audit and have come across a situation where the trustee paid over $50,000 as a brokerage or advisory fee to invest just under $155,000 in some property unit trust. I believe its is wiedly held Unit Trust and SMSF has acquired units in the trust and it is un relared trust.
The trustee has provided an invoice for the fee paid, which states that it is an introduction fee to the investment trust. The fee is charged by another adviser and not directly from the Unit Trust.
I believe that these terms are not commercially reasonable, as it seems excessive to pay 40% of the total investment value as a brokerage fee or introduction fee.
I am considering qualifying Part B based on Section 109 (non-arm's length dealing), Section 62 (sole purpose test), and $4.09 as the consideration given to the investment strategy to justify the substantial fee paid.
I would appreciate any feedback or insights on this matter."
Just following up on the above comment (and I notice many auditors qualify without notifying the trustees first), ASA 705 paragraph A27 *requires* auditor to notify trustees/management PRIOR to issing the qualification, to confirm the matters of disagreement that may give rise to a qualification, and to give trustees/management an opportunity to provide the auditor with furhter information or explanations.
In other words, you are obliged by the standards to run the potential qualification past the trustee before you issue the audit report.
Regards,