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Sandeep Dheer

Jun 29, 2021

Investment in Unlisted Trust

in SMSF Technical Forum

If a SMSF invested in unlisted trust, can we accept the unaudited financial statements of the unlisted trust to form and opinion regarding the market value of the investment? Also, what other documents should we ask from the trustee regarding the investment other than unit certificate? What are our responsibilities as an auditor regarding these investments.

Many Thanks

3 answers1 reply

Comments (4)

Unknown member

Jul 16, 2021

Dear Sandeep,

We should not accept the unaudited Financials. We should also checked the method of calculation of market value of units.

Sandeep Dheer

Jul 09, 2021

Many thanks for your help

Campbell McCart

Jul 09, 2021

Replying to

I would put in the Management letter and also possibly qualify the audit depending on the size of the investment. That we have relied on unaudited financial statements, we have not been able to confirm the exact current market value of the investment. That both members and trustees need to undertake further investigation to the realisable value of the investment. That as the auditor you will not be held liable for any any loss that may result as associated with this unlisted investment.

THE AUDITORS INSTITUTE

Jul 02, 2021

Hi Sandeep

If a SMSF invests in an unlisted trust then an auditor cannot accept the unaudited financial statements to form an opinion on the market value (or existance) of the investment. I assume you are referring to a Unit Trust that is considered a related party to the Fund.

I will use an example to explain. The XYZ Super Fund invests in the XYZ Unit Trust. The Trust has an investment in real property and the investors are 80% the Fund & 20% related parties. The investment is material to the Fund.

The audit approach should be to effectively "audit" the Unit Trust accounts. The auditor should review the property value (re market value review / title search) and also review / "audit" the income / expenses of the Trust.

In such an example the auditor should request re the unit trust:

1) Bank statements

2) Recent valuation re property

3) Title search

4) Rental statements

5) Invoices re property expenses

6) Financial Statements / ITR / Unit certificates

Thanks

SMSF AAA