Trustees who are yet to complete their SMSF accounts for the 2019 financial year must remember to disclose the COVID-19 pandemic as a significant event in order to prevent delays with their audit, an SMSF technical expert has said.
SuperConcepts SMSF technical and strategic solutions executive manager Philip La Greca said the recent impact of COVID-19 on the value of fund assets meant funds that had not yet completed their accounts for the 2019 financial year were legally obliged to disclose the pandemic as a significant event in the “Events Subsequent to Balance Date” note in their fund’s annual financial report.
“We’ve seen [a] material reduction in the value of some funds’ assets since the balance was done on 30 June 2019,” La Greca said during a webinar today.
“For most funds that have had their accounts done already for the 2019 financial year, that’s not an issue. But for any accounts that are being done for 2019, there is an obligation for the auditor to deal with the question about significant events subsequent to the balance date.”
He noted COVID-19 had been identified as a non-adjusting subsequent event for all year ends prior to it being announced as a pandemic in March 2020. As a result, auditors would expect funds to acknowledge the impact of the pandemic on the fund without altering the accounts for the 2019 financial year.
Auditors might wish to draw attention to the potential impact of COVID-19 in their audit report and document their concerns on the engagement file if they had concerns about the ongoing viability of the fund, he added.
Given the impact of the coronavirus on the value of fund assets was likely to continue past 30 June 2020, he said trustees might also be required to disclose COVID-19 as a significant event in their accounts for the 2020 financial year.