Is the pressure on to revalue assets under new super cap?
Concerns have been raised around increased pressure on auditors to accept lower valuations by clients who may want to slip under the new $3 million superannuation threshold.
However, Shelly Banton, executive general manager, technical advice for ASF Audits, said she believes the pressure will be more focused on trustees who have to prove their valuations through reams of documentation and evidence.
“Auditors have professional obligations we need to consider as we look at market revaluations and they are embedded in standards,” she said.
“Last year these guidelines were updated and provided a slightly new approach and people are still trying to find their way around that.
“It is difficult to determined what assets you have in funds and unlisted entities are hard to value. Listed entities like shares and bonds are easy but if a fund has unlisted entities there are a lot of steps that need to be taken to provide a valuation.
“There is whole bunch of twists and turns we have to take and it is not our job to provide an asset value but rather to make sure the methodology used supporting [sic] that valuation is right.
“So unless the trustee does properly, we can’t do our job properly.”
Ms Banton said there are a lot of things happening currently that may impact the value of assets such as the property downturn and she suggested that trustees who have a high valuation on 30 June 2025 will be wanting lower valuations on 30 June 2026.
“I should imagine that if I am trustee looking down at this I would possibly be looking to the end of 2023 financial year trying to look at higher valuation into my fund so I don’t have a large change in valuations from 2024–25,” she said.
“However, all valuations have to stand on their own. As auditors we need to have potentially other types of methodology available if a valuation doesn’t substantiate that and we have to rely on our professional judgement.
“It will be very interesting situation in how it is going to play out and the pressure we get moving forward. I think it is now all about trying to find out what the devil in detail and we don’t want to be jumping any particular way until we see how it plays out at the end of the day.
“The SMSF Association will be wanting to engage and discuss this proposal with Treasury to make sure it is not unfair in any way.”
Lyn Formica, head of SMSF technical & education services for Heffron, said there are rules around interactions with related parties but an SMSF can own shares, bonds, properties, and foreign assets.
“There are not a lot of rules about what you can own,” she said.
“In terms of valuations it’s easy to revalue to the market but if I have residential property in my fund I have to look at what is worth every 30 June.
“Some people argue that there will be more pressure on auditors to get low valuations, but I don’t agree with that. We already have lots of rules in relation to the revaluation of assets.
“We also already have thresholds for contributions, and minimum pensions that need to drawn out each year.
“This $3 million cap is just another cap we have to comply with and I don’t see there will be any change around valuations. If they have that type of client they will already be doing that now.”
