Are SMSF Auditors required to do title searches?
Property title
Are SMSF Auditors really required to order a title search over your smsf property and review the information contained within the title search annually and at the time of conducting your smsf audit.
What we check here and why
The Auditing standards require SMSF Auditors to check for appropriate Ownership at year end and the ATO compliance requirements specifically require SMSF Auditors to cover off on R8.02B Market valuation, R13.14 Charges over assets, S67 – borrowings.
R8.02B Market valuation
This one is borne out of the need to, when auditing an assets’ assertions to ensure the market valuation compliance aspects are also met. How do you say that your property is worth x$ when you don’t own it at 30 June?
I will add, SMSF Auditors can use the information in a title search, in conjunction with other evidence such as contracts of sale, settlement statements, sub lease agreements, pexa just to name a few evidenciary documents. This may be the case where a title search is suggesting that the smsf no longer is the owner due to a sale.
R13.14 Charges over Assets
Under SIS Regulation R13.14, an asset is restricted from carrying a charge over it or in relation to it unless it is permitted. This appears to tie into S67/67A where a borrowing is permitted provided a limited recourse borrowing arrangement is entered into and is in place for the duration. This ATO Publication guides SMSF Auditors on their obligations.
See this article for more information on limited recourse borrowing arrangements.
What does a title search cost?
Title Search fees can range in price and is dependent on where the property is situated. Each states titles registry charges title search providers different fees.
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