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Auditors Institute

Oct 29, 2020

Joint Venture Bank Account

in SMSF Technical Forum

SMSF has entered into a joint venture with an unrelated party to develop land currently owned by the super fund and construct two residential dwellings on the land. A legal contract has been drawn up defining the rights and obligations of the parties. SMSF to contribute 2/3 of development costs, venture partner 1/3. Once the dwellings are constructed then sold, profit to be shared on the same basis as the contributions. The venture agreement document however, provides that a (single) bank account be opened in the name of the joint venture, with both venture parties having access to it. To issue cheques though, at least two signatures required, one being one of the Fund's trustees, the other being from the other joint venturer. My question: can an SMSF operate such an account, and if so, should I as auditor, also require the joint venture books and records to also be audited?

Anthony Pollard

1 answer0 replies

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THE AUDITORS INSTITUTE

Feb 09, 2021

Hi, it is common for a Super Fund to invest in a property partnership or a joint venture where a bank account is set up jointly by the investors. The Fund can jointly operate a separate bank account where it reflects its share of the ownership of the bank account in its financial statements. As an auditor you normally would not require the joint venture (or Partnership's) financial statements to be audited. Normally there would be no legal requirement for such an entity to be audited. The auditor would review the documentation that establishes the Joint Venture or Partnership then would have to review the financial statements to obtain audit evidence to be able to complete their financial and compliance audits re this asset. It is a similar audit approach to a Fund investing in a related party Unit Trust.

Thanks

SMSF AAA