Unlisted assets in SMSFs are more likely to lead to qualified audits, an SMSF technical manager has claimed.
SuperConcepts technical support and training manager Marjon Muizer said unlisted assets tended to attract more scrutiny and had a higher chance of resulting in qualified SMSF independent auditor reports.
“Unlisted investments are now considered high-risk from an audit point of view and the ATO is expecting an increase in breaches being reported,” Muizer said.
She said cases of auditors being held liable for a lack of thoroughness in their investigations were a reason for the increased focus on unlisted assets, but also warned SMSF trustees should not lose sight of their own legal obligations when reporting their investments.
“It is your responsibility, as fund trustee, to make sure the assets of the fund are valued correctly. The role of the auditor is not to do the valuation, but to review the evidence that the recorded value is reasonable,” she said.
In order for trustees to meet their audit requirements and avoid auditor contravention reports (ACR) being issued to the ATO, she recommended all SMSF investments, especially unlisted assets, be correctly documented.
“The auditor will be after adequate evidence to establish the existence of the investment and whether it is recoverable. If this information is not available, your SMSF may end up with a qualified opinion and an ACR sent to the ATO,” she noted.
Recently, the regulator reminded auditors of their requirements to report any contraventions that have occurred or may occur within an SMSF and to produce a qualified report where necessary based on what they found during the audit process.