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SMSF holds many parcels of listed shares. Balance sheet prepared by the accountant listed the names of those shares with corresponding units against each listed companies, but only showing the respective cost price.
A market revaluation account is used and is reflected on the balance sheet to capture the movement. The overall shareholdings agree with the platforms valuation report.
The accountant is not prepared to reflect the market value for each listed companies due to the effort required.
I randomly check the valuation report to ensure selected units held agree but unable to reconcile each company’s holdings at market value. No year end holding statements are provided.
Multiple financials from this accountant are prepared in this manner.
As a compromise, I asked the accountant to report the total listed shares as one line entry on the balance sheet instead of individual companies and I can select individual companies against the platform's valuation report.
Will this satisfy the requirement for having sufficient audit evidence? The accountant uses MYOB software to prepare financial reports.
Hi Stephen
As the financial statements are special purpose financial statements it is acceptable that they record the listed shares at cost and then show a market revaluation account. I note that you have reached a compromise with the accountant to list the shares as a one line entry.
My view is that agreeing the shares to the platform's valuation report will not be sufficient audit evidence. The Melissa Caddick case showed that platform (broker) reports can be fraudulently amended with incorrect share holding amounts so the audit evidence you should be obtaining is confirming a sample of shares with the share registry.
If the platform reports that you refer to are a wrap type report where you cannot confirm share holdings with the share registry you will need to obtain a copy of the audit report in relation to the systems of the wrap entity.
Thanks
The Auditors Institute