Yes, I agree that you are auditing the accounts as at a specific date and therefore it may not warrant to qualify Part A. Yet you could handle your concern by the following 2 means:

A. In your management letter advise " that the audited accounts are now historical and may not be accurate to the current financial position of the fund, that markets have experienced high volatility due events such as covid, Ukraine War and conflict in the Middle East. Accordingly, it is Trustees responsibility to conduct their own diligence as to current financial position of the fund when making management and investment decisions. As auditors we accept no financial responsibility for financial loss due to market movement / volatility. "

B. This time in Part B, repeat the above, as an Emphasis of Matter.

By doing this you ae not Qualifying the accounts, yet firmly bringing your concerns to the attention of Trustees and Members.

This is a bit like the proposal to include unrealised gains in the tax calcs for SMSF's.

Surely next year's events are not candidates for qualification.

By all means the accountant can add a note, or the auditor, but not a qualification

I thought I saw that there was a recognition by the ATO that auditors super funds should not make judgements on the quality of the funds assets, or investment strategy?

John Hughes

Hi Frederick

Another approach may be to get the accountant to do a subsequent events note to the accounts that explains that certain list managed funds / shares have decreased in value post balance date.

If such a note is provided you may not have to issue a Part A qualification.

At the start of covid when the share market initially decreased in value it was common for SMSF accounts to be done with a subsequent events note to the accounts that explained the decrease in value of shares.

An example of a commonly used note in the past re covid is below:

"Note X: Subsequent Events

Post the financial year end, the Trustee notes that global equity markets have been adversely impacted by the outbreak of the COVID-19 virus. Other assets categories, including property, may also be adversely affected.

In particular, the volatility in equity prices worldwide and the impact of any Government imposed measures to counter the virus’s spread have, on the whole, materially impacted the current and future market value of the Fund. However, due to the rapid and ongoing changes, an estimate of the extent of this decline cannot be determined at this time."

If other forum members have a view please let the forum know.

Thanks

The Auditors Institute