Checklist Point

Audit Comment "Yes"

Audit Comment "No"

1. Is the Crypto Currency Account in the name of Trustees of the SMSF and there is no borrowing and is not acquired from any related parties ?

The Crypto Currency account (wallet) is in the name of the Member of the SMSF (XXXXX) however there is a Declaration of Trust in place that the account is held as custodian for the Super Fund. Inspected minutes to ensure that the Custodian was appointed by the Trustees of Fund. The Trustees have give assurance that the Private Key to the wallet is secured and is with another Trustee of the fund. There is no borrowing by the fund and the Crypto currency was not acquired (purchase or contribution) from the members or from any related parties.

(1) The Crypto Currency account (wallet) is in the name of the Member of the SMSF (XXXXX) however there is no Declaration of Trust in place that the account is held as custodian for the Super Fund. This is a breach of Regulation 4.09A of SIS Regulations. (2) There are no minutes of meeting to properly appoint any Custodian by the Trustees of Fund. This is in breach of Sec , 35AE and 35B of SIS Act (3) There was no evidence of internal control as the Trustees gave no assurance that the Private Key to the wallet is secured and is with another Trustee of the fund. (4) The fund has borrowed and the borrowing is not as per the exceptions listed in section 67A and 67B of SIS Act. This is a breach of Section 67(1) of SIS Act. (5) There is evidence that there are transactions in the crypto currency account which are transfers from other accounts belonging to related parties of the fund - these could be purchases or contributions. This is a breach of Sec 66 of SIS Act. (6) There is a charge over the crypto currency account. This is in breach of SIS Regulation 13.14.

This is line with SIS Regulations 4.09A - Operating Standard - money and other assets to be kept separate and in line with borrowing rules as per Section 67 Of SIS Act or there is charge over the account as per SIS Regulations 13.14. Also as per Section 66 - acquisitions of certain assets from members.

<Management

Letter>

During the course of my audit, I found that the fund has not complied to the following (1) The Crypto Currency account (wallet) is in the name of the Member of the SMSF (XXXXX) however there is no Declaration of Trust in place that the account is held as custodian for the Super Fund. This is a breach of Regulation 4.09A of SIS Regulations. (2) There are no minutes of meeting to properly appoint any Custodian by the Trustees of Fund. This is in breach of Sec , 35AE and 35B of SIS Act (3) There was no evidence of internal control as the Trustees gave no assurance that the Private Key to the wallet is secured and is with another Trustee of the fund. (4) The fund has borrowed to purchase the Crypto currency and the borrowing is not as per the exceptions listed in section 67A and 67B of SIS Act. This is a breach of Section 67(1) of SIS Act. (5) There is evidence that there are transactions in the crypto currency account which are transfers from other accounts belonging to members and related parties of the fund these could be purchases or contributions. This is a breach of Sec 66 of SIS Act. (6) There is a charge over the crypto currency account. This is in breach of SIS Regulation 13.14.

<Audit Report Qualification>

Trustee of the fund have breached the SIS Act and SIS Regulations whilst investing in Cryptocurrency (1) The Crypto Currency account (wallet) is in the name of the Member of the SMSF (XXXXX) however there is no Declaration of Trust in place that the account is held as custodian for the Super Fund. This is a breach of Regulation 4.09A of SIS Regulations. (2) There are no minutes of meeting to properly appoint any Custodian by the Trustees of Fund. This is in breach of Sec , 35AE and 35B of SIS Act (3) There was no evidence of internal control as the Trustees gave no assurance that the Private Key to the wallet is secured and is with another Trustee of the fund. (4) The fund has borrowed to purchase the Crypto currency and the borrowing is not as per the exceptions listed in section 67A and 67B of SIS Act. This is a breach of Section 67(1) of SIS Act. (5) There is evidence that there are transactions in the crypto currency account which are transfers from other accounts belonging to members and related parties of the fund these could be purchases or contributions. This is a breach of Sec 66 of SIS Act. (6) There is a charge over the crypto currency account. This is in breach of SIS Regulation 13.14.

<Contravention Report>

Trustee of the fund have breached the SIS Act and SIS Regulations whilst investing in Cryptocurrency (1) The Crypto Currency account (wallet) is in the name of the Member of the SMSF (XXXXX) however there is no Declaration of Trust in place that the account is held as custodian for the Super Fund. This is a breach of Regulation 4.09A of SIS Regulations. (2) There are no minutes of meeting to properly appoint any Custodian by the Trustees of Fund. This is in breach of Sec , 35AE and 35B of SIS Act (3) There was no evidence of internal control as the Trustees gave no assurance that the Private Key to the wallet is secured and is with another Trustee of the fund. (4) The fund has borrowed to purchase the Crypto currency and the borrowing is not as per the exceptions listed in section 67A and 67B of SIS Act. This is a breach of Section 67(1) of SIS Act. (5) There is evidence that there are transactions in the crypto currency account which are transfers from other accounts belonging to members and related parties of the fund these could be purchases or contributions. This is a breach of Sec 66 of SIS Act. (6) There is a charge over the crypto currency account. This is in breach of SIS Regulation 13.14.

2. Does the investment in Cryptocurrency meet the sole purpose test?

Confirmed that the fund was not set up only to purchase Cryptocurrency as the fund has other assets. Checked by the number of trades conducted by the Trustee, it does not appear that the Trustees are using the Crypto currency account as a business.

(1) Checked the trading account of the Crypto currency, there is evidence that the account is being used for Trustee personal use. This is a breach of Section 62 of SIS Act. (2) Checked the trading account of the Crypto currency and noted that there are a large number of transactions. These transactions show that the trustee is trading in Cryptocurrency and could be treated as a business.

This is in line with SIS Act Section 62 - Sole Purpose test

During the course of my audit, I discovered that the (1) the trading account of the Crypto currency, there is evidence that the account is being used for Trustee personal use. This is a breach of Section 62 of SIS Act. (2) the trading account of the Crypto currency have a large number of transactions. These transactions show that the trustee s trading in Cryptocurrency and could be treated as a business. Although business are allowed in an SMSF, however due the risky nature of the transactions, it is my role to alert you of losing capital of the fund.

The trading account of the Crypto currency, there is evidence that the account is being used for Trustee personal use. This is a breach of Section 62 of SIS Act.

The trading account of the Crypto currency, there is evidence that the account is being used for Trustee personal use. This is a breach of Section 62 of SIS Act.

Checklist Point

Audit Comment "Yes"

Audit Comment "No"

3. Is Cryptocurrency investment allowed by the Trust Deed and the Trustees have an investment strategy to hold Cryptocurrency?

Checked the trust deed of the fund and clause number XXX allows investment in Cryptocurrency. Checked the investment strategy of the fund and noted that the trustees have considered various risks in investments in Cryptocurrency.

Checked the trust deed of the fund and clause number XXX allows investment in Cryptocurrency. Checked the investment strategy of the fund and noted that the trustees have considered various risks in investments in Cryptocurrency. This is a breach of Section 52B of SIS Act and Regulation 4.09 of SIS Regulations.

<Mgt Letter>

During the course of my audit, I discovered that the trust deed of the fund does not allow investment in Cryptocurrency and checked the investment strategy of the fund and noted that the trustees have not considered various risks in investments in Cryptocurrency. This is a breach of Section 52B of SIS Act and Regulation 4.09 of SIS Regulations.

This is in line with SIS Act Section 52B and SIS Regulations 4.09 regarding the operating standard - Investment Strategy

< Audit Report Qualification>

The trust deed of the fund does not allow investment in Cryptocurrency and the trustees have not considered various risks in investments in Crypto currency in the investment strategy of the fund. This is a breach of Section 52B of SIS Act and Regulation 4.09 of SIS Regulations.

<ACR>

The trust deed of the fund does not allow investment in Cryptocurrency and the trustees have not considered various risks in investments in Crypto currency in the investment strategy of the fund. This is a breach of Section 52B of SIS Act and Regulation 4.09 of SIS Regulations.

4. Is the Crypto Currency valued correctly at Market Value on 30th June in the financial statements?

Checked the Market Valuation of Crypto currency as on 30th June from the XXXX Currency exchange. The valuation was $XXXX and in the financial statements it is stated at $XXXX. I am satisfied that the difference is Market Value is not Material. At the time of signing the audit report the market value was $XXX and the difference as stated in the financial statement is not material.

Checked the Market Valuation of Crypto currency as on 30th June from the XXXX Currency exchange. The valuation was $XXXX and in the financial statements it is stated at $XXXX. There is a material difference is Market Value. At the time of signing the audit report the market value was $XXX and the difference as stated in the financial statement is material. A note should be inserted in the financial statements regarding this material difference. This is a breach of SIS Regulation 8.02B.

This is in line with Auditing standard ASA 560 and auditing standard on Subsequent Events and Material events SIS Regulation 8.02B regarding Asset must be valued at market value.

<MGT Letter>

During the course of my audit, the Market Valuation of Crypto currency as on 30th June from the XXXX Currency exchange. The valuation was $XXXX and in the financial statements it is stated at $XXXX. There is a material difference is Market Value. At the time of signing the audit report the market value was $XXX and the difference as stated in the financial statement is material. A note should be inserted in the financial statements regarding this material difference or you should consider amending the financial statements showing the assets true value. This is a breach of SIS Regulation 8.02B.

<Audit Report Qualification>

The Market Valuation of Crypto currency as on 30th June from the XXXX Currency exchange. The valuation was $XXXX and in the financial statements it is stated at $XXXX. There is a material difference is Market Value of the asset. Further at the time of signing the audit report the market value was $XXX and the difference as stated in the financial statement is material. This is a breach of SIS Regulation 8.02B.

< ACR>

The Market Valuation of Crypto currency as on 30th June from the XXXX Currency exchange. The valuation was $XXXX and in the financial statements it is stated at $XXXX. There is a material difference is Market Value of the asset. Further at the time of signing the audit report the market value was $XXX and the difference as stated in the financial statement is material. This is a breach of SIS Regulation 8.02B.

5. Is the Capital Gain on Cryptocurrency correctly stated?

Checked every purchase and sale of Crypto Currency in the account and determined that each capital gain or loss is correctly reported in the financial statement

Checked in the account and determined that transaction of date XXX of $ XXX is not reporting the correct amount of capital gain or loss as reported in the financial statements.

This is in line with ATO tax determinations TD 2014/25 and TD 2014/26 and announcements from ATO that the any transaction of $10,000 and above will be reported to AISTRAC

<Mgt Letter>

During the course of my audit, transaction of date XXX of $ XXX is not reporting the correct amount of capital gain or loss as reported in the financial statements. This difference is / is not material. This is a breach of Section 35B of SIS Act.

<Audit Report Qualification>

The transaction of date XXX of $ XXX is not reporting the correct amount of capital gain or loss as reported in the financial statements. This difference is / is not material.

<ACR>

Transaction of date XXX of $ XXX is not reporting the correct amount of capital gain or loss as reported in the financial statements. This difference is not material. Incorrect amount of tax is calculated by the trustees of the fund. This is breach of Section 35B of SIS Act