SMSF auditors should not state the holding of an asset within a fund is risky or problematic, but rather indicate the trustee has not provided sufficient evidence for an accurate valuation, according to an auditing trainer.
Speaking at The Super Playbook 2025, co-hosted by the Institute of Financial Professionals Australia and The Auditors Institute in Sydney last week, ARC Super director Ashley Course said auditors should not consider the investment strategy as a justification for holding risky assets and should request more information on why they may be held.
“I’ve heard people say over the years that when in doubt look if the investment strategy allows for something [like holding the asset],” Course said.
“Of course, it’s going to allow for something. We’re talking about 600,000 funds in the sector having the same investment strategy, which is ‘we can do whatever we want’.
“When you get risky assets, go and look if the trustees have really considered the risks.”
He added where an auditor found an asset of concern, they could not provide advice regarding its risks, but could identify their concerns via their report to the client.
“How do you tell them it’s a risky asset without telling them it’s a risky asset? State ‘I can’t value it’ or ‘you haven’t documented the risks’,” he said.
“When you can’t get audit evidence that’s sufficient and appropriate and if that inability to obtain evidence is material, but not pervasive, qualify the report.
“I was not able to obtain sufficient appropriate evidence – that is what you are saying.
“If the fund has millions of dollars’ worth of private loans to developers, you can state: ‘I do not form an opinion on the entire financial report because of the pervasiveness of the asset.’
“When it comes to Part B – the adverse opinion – you can say: ‘I was not able to obtain sufficient appropriate evidence to form an opinion on the trustee’s compliance with Superannuation Industry (Supervision) Regulation 802B,’ and you’re disclaiming your opinion.”
