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Alkesh Soni

Feb 07, 2024

Investment in private company - developer

in SMSF Technical Forum

I am auditing a fund ABC SMSF which has invested in shares of 3 private companies of one developer group. The total investments is about 24% of the fund's total asset. In 2022 audit, as there were no sufficient audit evidence to support the investments existence and market value, I qualified my Part A and Part B of the audit report (Qualified, non-rectified).

Now, for 2023 audit, the trustee has provided me with the group companies bankruptcy letter and complaint made by trustees to ASIC. Based on this the accountant has booked market value of the investments as Zero (did not yet book the loss).

As I have qualified my 2022 report, how should I report this to ATO in my 2023 report and under which sections? Kindly guide.

1 comment

Comments (1)

THE AUDITORS INSTITUTE

Feb 07, 2024

Hi Alkesh

My view is if the accounts record the investment at $0 they appear to have been correctly prepared (as the company is bankrupt) and as a result there would be no need to qualify your audit report or lodge an auditor contravention report.

Thanks

The Auditors Institute