Accounting Officer Report for Trusts
Two or more persons can contract to form a Trust. This contract is called a Trust deed which contains stipulations for the benefit of a third. A Trust deed stipulates the terms upon which a number of Trustees are appointed to receive, hold, administer and distribute certain Trust property for the benefit of defined beneficiaries. An inter vivos Trust is a Trust which is established by the Founder during his lifetime.
A Trust enables:
• The protection of Trust funds for the benefit of beneficiaries
• The protection of assets from business risk
• Obtaining tax benefits
• Carrying on a business
The Trust Property Control Act, 57 of 1988 and the Trust deed, regulates Trusts. The Act regulates the control of Trust property and prescribes the minimum duties for trustees.
Additional duties and functions may be prescribed in the Trust deed. Trustees are appointed in terms of section 6 of the Act and any specifications in the Trust deed. The Master of the High Court must authorise a person to act as trustee.
The Master may require a person to furnish security before being appointed as trustee.
Trustees are required to act with such care, diligence and skill as “can reasonably be expected of a person who manages the affairs of another”. A trustee will also be called to account by the Master for that person’s administration and disposal of trust property and shall “at the written request of the Master, deliver to the Master any book, record, account or document relating to his administration or disposal of the trust property and shall to the best of his ability answer honestly and truthfully any question put to him by the Master in connection with the administration and disposal of the trust property.”
Our Company assists Trustees with their administrative duties imposed in terms of the Trust deed, the common law requirements of acting with care and skill and the requirements of the Act. Keeping books of account, preparing financial statements and obtaining an appropriate report on the financial statements are an important part of the duties of trustees.
The Act does not prescribe the type of report that should be issued on the financial statements of the Trust. The only reference to the word “audit” is section 15 of the Act which requires the person “that audits the accounts of a Trust” to report irregularities. The type of report to be issued as well as the rights and duties of the person that will issue the report should therefore be prescribed in the Trust deed or specified by trustees if the Trust deed is silent. This should also be documented in an engagement letter.
Our Company may agree to provide the following reporting services to the Trust:
• An accounting officer report as required in the Close Corporation Act, 1984 with necessary amendments to the context
• A report issued in terms of ISRE 4410: Agreed-Upon-Procedures
• A report issued in terms of ISRE 2400: Review engagements