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a 2 member smsf in accumulation mode has 2 saparate investments in property trusts which own real estate
the fund has not revalued the investment in the 2 trusts for two (2 or more) years.(ie the shares)
Similarly the property trusts (fixed Trusts) have not reviewed and valued the underlying properies held in the Trust
I have requested trustees to seek that the that the unit trusts do a property valuation asap.
as auditor am i required to make any comment in my report as I am unable to verfy the correctness of the
values of the respective shares held
Hello Mike
Thanks for your question,
Regulation 8.02B of the regulations to the SIS Act requires that the assets of a superannuation fund are reflected at their market value at year end.
If there is a liquid market for the trading of units in two property trusts, then the value of units can hopefully be determined with reference to the closing value of the units at year end.
To the extent that the unit trusts are not readily tradable, then a more detailed consideration needs to be given to the net asset value of the unit trusts as at year end.
This is where the value of the unit trusts’ interests in underling assets (presumably real estate) as at year end becomes relevant.
If, as fund auditor, you are not satisfied with the valuation of the fund’s assets at year end, this may give rise to a qualification of the audit report at Part A – if there is a material misstatement of a fund’s assets – or if you are unable to obtain evidence supporting the value of the assets of fund (which is material).
It may also give rise to the need to qualify Part B of the audit report – which is concerned with, amongst other things, compliance with Regulation 8.02B of the regulations to the SIS Act.
Furthermore, if the units in the property trusts are worth more than $30,000 and/or more than 5% of the fund’s total assets, and you are not satisfied with evidence provided in relation to the valuation of these units, then an ACR may need to be lodged.