The regulator said these “outdated” practices include only obtaining a valuation every three years or not obtaining objective data related to the underlying assets of an unlisted unit trust.
It added this is a breach of their obligations and can result in penalties for trustees and compliance action for auditors.
“Every year, trustees must value the assets of their SMSF at market value when preparing financial statements and accounts. Our valuation guidelines for self-managed super funds provide advice to trustees when valuing assets,” the Australian Taxation Office (ATO) said.
“Auditors play an important role in verifying the market value of fund assets. They must obtain evidence to support the valuations as part of their audit. If the evidence doesn’t support that the valuation is at market value, the auditor should consider modifying their opinion in the independent auditor’s report and lodge an auditor contravention report (ACR), if the reporting criteria are met.”
Last year, the ATO analysed its own data and identified more than 16,000 SMSFs that reported assets such as property and unlisted trusts at the same value for three consecutive years. There were over 1,000 auditors involved in the audits of those SMSFs.
In March and April 2024, the regulator contacted those SMSFs and auditors to remind them of their obligations and then checked the value of the assets reported to it when those SMSFs lodged their next SMSF annual return.
It found that 80 per cent of the SMSFs updated their property valuations, but only 48 per cent updated the unlisted trust valuation.
Where valuations were not updated and ACRs were not lodged, the ATO commenced reviews on those auditors involved and asked for the evidence used to verify that the assets were valued at market value. In all cases finalised so far, it found the auditor didn’t obtain sufficient evidence to verify the market value.
Seriously !!! If you are an auditor you MUST comply with the auditing standards. The price of the audit has no impact upon the degree of compliance.
Trustees should be aware of their obligations
Auditors must be aware of the auditing standards
The race to bottom in fees is not an excuse for not undertaking a proper audit
If your budget for the auditor is only $330 – he/she has only time to check a few things – I am auditing a fund for the first time with 2 residential properties both had LRBA’s now paid off – $2M with one member on an account based pension (2 paged document) on a trust deed dated prior to 2007 – to check every 30 clause numbers of SISA and SISR + checking if the sums add up (rental income is calculated on accurial basis) and the tax is caculated correctly etc (I found that ECPI figure is based on what you punch in the Actuarial’s website – it comes with her digital signature and a big disclaimer – so has to be checked, if correct)
I good job (what the ATO wants) will come at a wage less than what a checkout chick makes an hour – So you burn your degrees and ASIC Auditor Approvals – you will make more money and will not be publicly shamed by ASIC stacking bread on shelves…
Or you can wait for all the $330 SMSF auditors to be disqualified and then start auditing funds = but I am told that you will be disqualifed if you don’t audit funds for 5 years 🙂