Ernst and Young has outlined key auditor considerations which have come to light as a result of the requirement for an SMSF’s assets to be valued at market value for the purposes of preparing financial accounts and statements.
Speaking at the Institute of Chartered Accountants Australia’s 2014 Audit Conference last week, Ernst and Young executive director Matina Moffit explained that the new requirements applied from the 2012-13 financial year onwards.
She also said more effort will be required of auditors as a result of this change, to ensure trustees are aware of their obligations prior to having an audit conducted.
Ms Moffit also indicated that despite a trustee’s confusion over market valuation processes, the role of an auditor is not to value the assets, it is to assess the valuation method and evaluate it for accuracy.
“It’s very important that we retain that distinction,” Ms Moffit said. “We’re there to assess the valuation that is undertaken by the trustees."
“In situations where the auditor is unable to form an opinion in assessing whether the valuation is accurate and reasonable, the auditor should consider modification of the auditor’s report, taking into account materiality and the risk of material misstatement.”
Ms Moffit pointed out that while the ATO expects trustees to consider the value of the assets in their fund each year, this does not mean than an external valuation for all assets each year is necessary.
“For example, assets such as real property may not need an annual valuation unless a significant event occurred that may change its value since it was last valued, for example [a] natural disaster [or] market volatility.”
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