This article will teach you about the various validation checks that a Class performs at year-end and which appear on the Exception report.

 Navigate to fund level > Reports > Exceptions report

1. Select the Financial Year
2. Fund and Member Details
3. Duplicate Security Issues
4. Distributions - Processing of Tax Statements
5. Investments
6. Accounting
7. Reconciliation
8. ECPI Calculation Method Changing
9. TRIS to Retirement Phase Income Stream
10. Elected Segregation
    
    

Fund Member Details

This section is only applicable to SMSF's. This section shows:

• If the fund structure is invalid
• Where a fund does not have Trust Deed details recorded
• Where a fund does not have Trustee details recorded
• Where Members do not have TFN's recorded
• Shows when the Corporate Trustee has too many directors, i.e. they are not members of the fund
• Shows when the fund does not have an active Chairperson, either as an Individual Trustee or Director of the Corporate Trustee
• Shows when the number of active members in the fund is more than 4

Error Messages

The trust deed details haven't been recorded	Solution > Go to the Fund Structure screen, make sure the trust deed details have been recorded correctly
The fund structure is invalid. It may need more trustees or members	Solution > Go to the Fund Structure screen, review/update the relationships to meet the SMSF member/trustee/director rules
Member XXXXX doesn't have a TFN recorded	Solution > Go to the Browse Members screen, click on the member mentioned and then the Member Details tab. Enter the Tax File Number for the member.
Member XXXXX hasn't been added as an individual trustee	Solution > A majority of members of an SMSF must also be an Individual trustee of the SMSF or a director of the Corporate Trustee of the SMSF. Go to the Fund Structure screen and check the Trustees. Review/update the relationships to satisfy this rule

 

 

Duplicate Security Issues

This section shows when a security code has been created by a user at a Business, Brand or Fund level where the same one already exists at the Community level.

Error Messages

The Security Issue with Common Code XXX at the Business level used by one or more Holding Accounts in this Fund duplicates a Security Issue with the same Common Code at the Community level (This may mean you will not receive automated pricing for this Holding)	Solution >  Step 1. Navigate to Business level > Investment > Browse Securities > search for the code > you will see code appears twice. One will have the scope as Community, the other will have Business/or Brand. You should select the Business/Brand level one (Market Code will be 'User') and change the description to Do Not Use and Save.
	Step 2. Then navigate to fund level, override the code which is in the fund via Investments > Browse Holding Accounts > click into the required investment > Edit > click on Change for Security Issue and override the Security Issue code and Code to the correct one.

 

Distributions - Processing of Tax Statements

This section shows where there is a discrepancy between the amount of distribution taken up for the fund (in the current financial year) and the tax statement amount which has been taken up for the same investment. 

In most cases, tax statements have not been processed which is why they show up here however in other cases where tax statements have been generated for the fund the discrepancy could be due to an incorrect accounting date on a distribution event which is why there is a variance between total income and total tax statement amounts for the year.

Error Message

The total of interim Distributions for XXXXX does not equal the total of Final Distribution for XXXX: Financial Year. The interim Distributions exceed the Final Distribution by XXXX

Solution > Typically the issue here is that the Tax Statement event is yet to be processed.  Navigate to fund level > Periodic Processing > Tax Statement Console.  Check if you have any items with the status 'Generate Tax Statement'. These will probably correlate with the investments here. You will need to follow the process set out in Tax Statement Console

 

Investments

This section shows:

• Where assets that have more units sold then held as at the date of sale
• Details of current negative bank accounts, excluding Custom Holding Accounts

Error Messages

The holding amount for XXXXX becomes negative after the sale on XXXXX	Solution > Go to the Browse events page and review the disposal events or corporate action events processed for the mentioned holding account on the date specified. The resulting transaction has caused the Holding Balance to become negative which will disable your ability to run period updates. You should amend the transaction or process additional acquisitions to remove the negative holding.
The bank account XXXX has a negative balance	Solution > This will show the account name for any bank/fixed income account that currently has a negative balance. This may be correct and as the accountant, there is nothing you can do about this. You need to take it up with the trustees to resolve as a bank/fixed income account for a superannuation entity should never be negative.

 

Accounting

This section shows:

• When there is unallocated income for a period (i.e. income processed after a period update has already been run)
• Member accounts with negative balances (applicable for SMSFs)

Error Messages

There is an unallocated income after the period update with end date DD MMM YYYY	Solution > Some transactions may have been added, updated or deleted for the period. You need to reverse and re-run the period update for the period
The account XXXX of member XXXX XXXX has a negative balance	Solution > Transactions have been processed that have caused this account to go negative. Review a member statement for the account to see a summary of the transactions and add/update/delete the transaction(s) that cause the account to go negative. Also drilling down on the member in the live Statement of Financial Position report can show you the transactions that are causing the issue.
Pension account XXXX of member XXXX XXXX has transactions but it hasn't been established	Solution > Go to the Members > New Pension Account page and re-establish a pension account for the relevant member(s).

 

Reconciliation

This section shows if there are balance reconciliation errors between the feed and the ledger. This means that one or more of the investment accounts linked to a feed are not reconciled, i.e. ledger balance is not equal to feed balance.

Reconciliation exceptions are aimed at alerting the Administrator that a discrepancy has occurred. This may have been a result of timing differences in processing, or after the year-end being worked on. Action may not be required

Error Messages

One or more holdings in this fund have balance reconciliation errors

Solution > In order to view the history click on the link as shown when you have a reconciliation error and you will then be able to see the Balance Reconciliation screen

 

ECPI Calculation Method Changing

This section is only applicable to SMSF's. It shows if any period updates are required due to the ECIP calculation method changing.

Deemed Segregation – For an SMSF that is eligible to use the segregated method in a given financial year, if at any stage during that year there are periods where the assets are solely supporting retirement income streams then those periods are ‘deemed’ to be segregated.

Deemed Unsegregated – For an SMSF there are periods where it is not "deemed segregated" during the financial year. This normally implies the fund was either in full accumulation phase or mixed mode where the assets are supporting both accumulation or retirement phase interests.

Error Messages

Period update required on xx/xx/xxxx due to ECPI calculation method change on xx/xx/xxxx from Deemed Unsegregated to Deemed Segregated	Solution > You will need to run a period update on the stated date
The total interim Distributions for Security Code (e.g. APA) do not equal the Final Distribution for ECPI method Deemed Unsegregated (xx/xx/xxxx). The interim Distribution exceeds the Financial Distribution by $xxx.xx	Solution > You need to pro-rata the tax statement based on the distribution cash amount in the affected period
The total interim Distributions for Security Code (e.g. APA) do not equal the Final Distribution for ECPI method Deemed Segregated (xx/xx/xxxx). The Final Distribution exceed the Interim Distribution by $xxx.xx	Solution > You need to pro-rata the tax statement based on the distribution cash amount in the affected period

 

TRIS to Retirement Phase Income Stream

This section is only applicable to SMSF's. It shows if any period updates are required due to TRIS to Retirement Phase Income Stream.

If the TRIS balance is over $1.6m, you need to consider whether to reduce its balance through partial commutation as soon as it converts into retirement phase.

Error Messages

Period update required on xx/xx/xxxx due to TRIS changing to Retirement Phase Income Stream. Account: Mr XXX XXXX - Pension Name

Solution > You will need to roll back any period updates that have been run, and re-run the period update based on the specified date. This ensures the TRIS will get its share of tax allocation and once it becomes retirement phase, it will continue to receive tax exemption.

 

Elected Segregation

This section is only applicable to SMSF's. It shows if the fund has used elected segregation to work out ECPI.

Error Message

The fund is ineligible to use elected segregation due to the Total Super Balance being greater than $1.6 million. Please review the asset segregation for pension selections in the Fund Policy and re-process period update

Solution > You need to deselect the option Assets Segregated for Pensions in the fund policy. Rollback any period updates that have been run, and rerun the period update using the unsegregated method and obtain an actuarial certificate to work out ECPI. For funds that have disregarded small fund assets, it must use the unsegregated method to calculate ECPI.

 

What's Next?

Learn how to troubleshoot some additional Exception Report Error Messages