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Campbell McCart

Jan 22, 2024

QUALIFIED AUDIT REPORT UNLISTED INVSTMENTS

in SMSF Technical Forum

Can you provide clarification when it comes to qualifying Unlisted Investments in the audit report where we have not been supplied audited financials or formal valuation of the asset. Should we be qualifying Part A, Part B or both. Should we be lodging an auditor contravention report.

EXAMPLE

Fund has total $1,000, 000 invested. Cash $150,000 10%, Listed Shares, $600,000 60%, Managed Fund ( Platinum Asia Fund ) $125,000 12.5% and $125,000 Unlisted Company Shares 12.5%. No audited financials are supplied for Managed Fund or investment in Unlisted Company Shares. Annual tax report and unit valuation supplied by Managed Fund. My dilema is that I consider I do not have appropriate evidence to determine an opinion about the value of the investments. Also what about materiality based on fund total investment.

Question do I qualify PART A, if so what sections of act have been breached?

Question do I qualify PART B, if so what sections of act have been breached?

Question do I lodge an auditor contravention report?

1 comment

Comments (1)

The Auditors Institute Ltd

Jan 22, 2024

Hello Campbell

Thanks for your question.

If the Platinum Asia Fund is run by Platinum Asset Management and has the ASX code: PAXX, then it is traded on the ASX and the valuation as of 30 June based on closing trading value would be an appropriate basis for market value.

In relation to the shares in the unlisted company, the trustee of the fund should provide in writing the basis upon which they have valued the shares.

If you are not satisfied with the basis of the valuation of the shares, this may give rise to Part A qualification if the valuation of an asset of the fund has been materially misstated or cannot be adequately tested.

If the investment in unlisted shares cannot be verified, then it can also give rise to a breach of Regulation 8.02B, which gives rise to a qualification at Part B of the auditor’s report.

Assuming the dollar value of any breach (such as a breach of Regulation 8.02B) is more than $30,000 or more than 5% of the fund’s total assets, then it should also be reported in an ACR.