The ATO has confirmed its recent direct communications with SMSF auditors is aimed at educating practitioners as to their obligations regarding asset valuations rather than penalising them for not fulfilling their professional duties.
To this end, the regulator undertook a mail-out across April and May to 16,000 funds involving 1000 auditors on the basis of concerns over the non-reporting of potentially problematic SMSF asset valuations that had not changed over a number of years.
“The purpose of the mail-out [was not to represent] a compliance intervention. It was to remind trustees and auditors of their obligations when considering the market value of their assets, including [when undergoing] the annual audit,” ATO acting deputy commissioner Paul Delahunty told SMSF Association head of technical Mary Simmons during a recent Q&A session.
“So the expectation in us sending that correspondence, and broader communication that we’ve also been undertaking, has been to raise awareness of the ATO’s expectations around market valuations and fund reporting requirements.”
Simmons revealed the correspondence has worried some practitioners and led them to ask for more detail so as to allow them to identify the problematic SMSFs they are currently servicing akin to the information that was provided with the regulator’s mail-out regarding investment strategies.
According to Delahunty, the nature of the exercise has meant the ATO has been unable deliver this data set.
“I can understand parallels that many of your members might be drawing with the previous campaigns, such as the investment strategy mail-out, but I’d just like to point out this is somewhat different,” he said.
“As mentioned this is not specific compliance action that we’re taking … [also] the difficulty that we have in sharing that information is that we do have privacy constraints, particularly in relation to SMSFs where the auditors aren’t essentially attached to the fund for the purpose of lodgement activity.
“I guess the important point that we’d like to make is that the mail-out is not requesting specific actions for auditors.”
