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Are you able to provide in depth guidance as to how these are audited for market value? It would be great to have a deep dive into auditing these with a presenter soon - i can see this being something that alot of auditors would need access to. Example: 10 Unit holders have subscribed to an equal number of units each and they are unrelated to each other. The unit trust acquired a real estate property for $2,000,000 and made one more investment in another unlisted entity for $2,000,000 in its first year. There are no borrowings within this entity. In year 2 and future years, assuming these same assets are held year after year, we need to determine whether our SMSF's investment in this unlisted entity is being reported at market value - how are we achieving this? How are we determining that these are reported at market value or that we are happy that the trustees have done so? How are we calculating it specifically? What different methods of working out market value or value in general exist? Do we just accept how the trustee or their accountant have determined it? Your response may have some additional questions by myself after you post it because id really like to drill down into your response to this. I can see another post in relation to this but that response really leaves alot to the imagination.
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I have a client with a material percentage of unlisted companies as their assets. They have supplied me with annual reports but have not come up with any recent sales (of units) prices. One of the companies has a material percentage of their assets as Intellectual Property valuation but it would require a considerable of audit time to flesh this out. I have trustee valuations for a couple of years but am concerned to get more solid values.
Any ideas welcomed.
Qualify as a Part A if you are unable to be satisfied as to whether the valuation is reasonable . A Part A qualification is not that serious and in the ATO annual return they don't even ask whether the issue has been rectified. If its an obvious departure from market value a Part B qualification is required
Hi Mark
I assume the Unit Trust is a material investment to the SMSF.
The auditor should not rely upon the accountant of the Unit Trust in relation to the value of the units re an investment in a Unit Trust similar to the one you have referred to. The "look through" approach to the audit should be adopted and the assets and liabilities of the Unit Trust should be reviewed to ascertain if the market value is reasonable in the Fund's accounts.
Thanks
SMSF AAA