The ATO has amended its guidance regarding residential property valuations for an SMSF, taking a more practical approach to the exercise and bringing its direction more into line with the procedures auditors are currently observing, a senior education executive has said.
“[With reference to] kerbside valuations, the ATO guidelines used to say that the valuation ‘must’, and they used the must, stipulate the supporting data and include comparable sales. But now what [the guidance] says is the kerbside valuation ‘should’ stipulate the supportable data and include comparable sales because it is the sole source of evidence being relied on to substantiate that valuation,” ASF Audits head of education Shelley Banton told attendees of a technical webinar she hosted yesterday.
Banton noted the change was subtle, but very significant.
“So the ATO is taking a more practical approach, which is really reflecting what auditors have done in practice,” she said.
“[It means] if you’ve got a kerbside valuation that lists more than one source of evidence to justify the value of the asset, [and where] comparable sales are mentioned in that list, [then] comparable sales [data does not have to] be provided.”
She pointed out the regulator’s slight shift in approach to kerbside valuations of a residential property created more certainty for practitioners when performing an annual SMSF audit.
“All of this leads to putting the final risk assessment of that valuation methodology used squarely in the auditor’s lap,” she acknowledged.
“We know that the role of the auditor isn’t to value fund assets; they’re responsible for checking the valuation of the asset to make sure the trustees have valued assets at market value and that the value is based on supportable data.”
According to Banton, it all comes down to the professional judgment of the auditor to determine if they have sufficient and appropriate evidence on which they can rely that the fund’s financial statements are presented fairly.
