Speaking to SMSF Adviser, Hayes Knight director of SMSF Services Ray Itaoui said Auditing Standard ASA 560 (ASA 560) requires auditors to apply audit procedures designed to obtain sufficient evidence that all events up to the date of the auditor’s report that may require adjustment or disclosure in the financial report have been identified.
Under ASA 560, procedures to identify such events should be performed as close as practicable to the date of the auditor’s report and may require the auditor to read the trustees’ minutes, make enquiries with the SMSF’s lawyers concerning litigation or a marital split, and ask trustees whether any subsequent events have occurred which might affect the financial report, such as sales of investments or significant adjustments to investment values, said Mr Itaoui.
“A fund with a high percentage of its value invested in cryptocurrencies may see a sharp decline in market value from balance date until when the audit is completed. Material decreases in the fund’s value will need to be addressed in the audit report,” he warned.
“A material event may require appropriate disclosure and amendments to Part A of the audit report, the financial report.”
If the price fluctuations are significant but do not cause a significant impact on the fund’s balance, the auditor, he said, may include an emphasis of matter paragraph to highlight that the financial report has been revised due to the discovery of a subsequent fact.
“The addition of such an emphasis of matter paragraph does not affect the auditor’s opinion, but draws the user’s attention to the matter raised,” he said.
He also stressed that any loss resulting from hacking would be a subsequent event that would also need to be disclosed in the audit report.