Property valuations still causing SMSF audit delays
The requirement to include comparable sales data for kerbside valuations for properties is seeing issues and hold-ups with SMSF audits, particularly with some real estate agents now charging for this service.
Speaking to SMSF Adviser, ASF Audits head of education Shelley Banton said one of the major SMSF audit issues continues to be property valuations.
Ms Banton said that under the auditing requirements, SMSF auditors need to be able to see comparable sales results for properties.
The ATO has made it clear in its guidance that real estate appraisals that state what the property is likely to sell for based on sales in the area, without listing details of those sales, would generally not on its own be sufficient and appropriate evidence.
“As auditors, we’re supposed to be assessing the methodology that’s being used to value an asset. In the case of a kerbside valuation that just states that they’ve looked at comparable properties and gives a valuation but the comparable properties aren’t listed there, we can’t actually assess that methodology in line with the auditing standards,” Ms Banton explained.
“Therefore how can we actually state or sign off on the fact that those assets are fairly stated.”
With few kerbside valuations coming through that include these comparable sales, Ms Banton said this is resulting in a lot of issues and hold-ups in audits at the moment.
“We then have to go back and ask for more information and ask for those comparable sales to be included,” said Ms Banton.
“In some cases, and while it’s not widespread yet, I’ve heard of real estate agents starting to charge for this service.”
Ms Banton said it might therefore be cheaper in some cases to obtain an online valuation that will have those comparable sales included.
Market valuations for unrelated entities and unrelated unit trusts and companies also continue to be an issue, she said.
“It can sometimes be very hard to get that information, if we do get it, we may only get draft financial statements, we may not get signed financial statements,” said Ms Banton.
“It makes it even more difficult when the accountant who’s preparing the super fund doesn’t prepare the accounts for that unrelated entity. You’re trying to get that information from a fourth party [and] there’s no requirement from that accountant who’s providing those financials to provide it to the SMSF accountant.”
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
