Auditors flagging a problem with the valuation of an asset may not mean there are issues with an SMSF holding it, but rather the fund has only failed to prove what its market value actually is, a specialist practitioner has stated.
Tactical Super director Deanne Firth said while the ATO was the final arbiter on whether an SMSF should hold an asset, even where the returns from unlisted assets, closely held assets or those with no market were good, auditors should still lodge an auditor contravention report (ACR) if they are unsure about their valuation.
Responding to a question at the recent Auditors Institute Auditors Day 2025 in Melbourne as to whether practitioners should apply Superannuation Industry (Supervision) Regulation 8.02b in these cases, Firth also noted ATO guidance stated an asset with no known value would not be considered a prudent investment.
“How we should treat these assets and funds is a matter for the ATO, but it does depend on the circumstances,” she said.
“I have seen funds that bought listed investments, but they have since been delisted and now they really struggle to value them.
“When they purchased the investment, it was easy to value, but circumstances have changed. The trustees still feel it’s a good investment with a good outcome for the super fund.
“There are some funds that tend to invest in all sorts of weird and wonderful things, but you may want to show them that it’s still a good investment.
“There are a lot of illiquid but still good-quality investments that are not being regularly traded, and are difficult to value, that are actually really solid investments for super funds.
“I don’t know how the ATO would go arguing that with the super fund and I wouldn’t want to jump into that.
“I would probably go that reg 8.02b ACR in these cases, unless they are doing some really weird things on an ongoing basis, because a lot of those unlisted investments have good returns, it is just proving their value that is really complicated.”
