202129.1 The importance of a properly formulated Investment Strategy

Which of the following is not a factor for consideration by the trustees of an SMSF when formulating, reviewing or giving effect to an investment strategy? *This question is required.

• a) Risk involved in making, holding and realising investments.
• b) Extent of diversification of fund investments.
• c) Liquidity of fund investments.
• d) Ability of the fund to discharge its existing and prospective liabilities.
• e) The type of default insurance for each member of the fund.

How often should an investment strategy be reviewed? *This question is required.

• a) Once a year.
• b) Twice a year.
• c) At least annually.
• d) At least annually, but also when there is a significant fund event.
• e) When the trustees deem it necessary.

True or False – An SMSF can offer more than one investment strategy to members? *This question is required.

• a) True
• b) False

Non-compliance with the investment strategy requirements in the SIS law may result in? *This question is required.

• a) Action for loss or damage under section 55 SIS Act.
• b) Lodgement of an Auditors Contravention Report (ACR) by the SMSF’s auditor with the ATO.
• c) Imposition of an administrative penalty under section 166 SIS Act of 20 penalty units per trustee.
• d) All of the above

Can an unlicensed accountant prepare an investment strategy for an SMSF client? *This question is required.

• a) Yes
• b) No
• c) Yes, provided it includes a disclaimer that the accountant is not licensed.
• d) Yes, provided it is a pro forma generic investment strategy that falls within the broad asset allocation exemption in Regulation 7.1.33A of the Corporations Regulations 2001.
• e) Yes, provide the accountant advises the SMSF client that it’s for compliance purposes only.