A specialist auditor has warned practitioners to take into account how recently a property valuation has been made when looking to use SMSF administrative software for this type of information.
“For residential property it’s quite easy, you can grab the valuations off the software providers. However, what you’ll notice is the valuations and comparable [information] from [those pieces of software] is for the date [the providers] want to report,” Tactical Super founder and director Deane Firth noted.
Firth pointed out this means the particular property valuation may well be out of date when it is needed for year-end audit purposes.
“If the comparable [information] is run eight months earlier, [then it may be obsolete]. At the moment, in Sydney especially, eight months is a massive difference in the value that [has been recorded] and we’re auditing at 30 June,” she said.
“Who would have thought the Sydney market would have [experienced a drop this year] and in some areas is it was quite significant.
“So that eight months can make a big difference.”
According to Firth, auditors can incorporate a simple action into their year-end procedures to ensure the valuations from SMSF administration software are current.
“What I recommend is [sending] a reminder in June to clients and ask them to run all of the valuations as close to 30 June as possible so the comparable [information is] for the right period,” she recommended.
“Getting those comparable sales figures for the right [time period] is really important.”
She took the opportunity to warn against any reliance on rates notices as part of the valuation process as well.
“[You can use] rates notices if they are consistent, but how often do you find rates notices that are consistent? Pretty much never,” she observed.
“So basically when people are using rates notices, they are generally not consistent with other forms of valuation so you can’t [as an auditor] use it as evidence.”