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Lynda MacPherson

Sep 15, 2023

Valuation "fraud"?

in SMSF Technical Forum

So, I have an interesting issue. I'm auditing an SMSF from a local accounting practice. This is the SMSF of the accounting firm owner. Inside the fund is an Argyle pink diamond. After requesting it, I was provided with a valid valuation via a certificate of appraisal from a diamond jeweller for the 2022 audit. It includes an imprint of gem ID and authenticity - all good.

This year I am auditing the 2023 work. The identical valuation document has been provided to me but with the date blanked out and word processed to show August 2023 AND the reference number has been word processed to change to another random number (the two amended fields flash when you open the document). Seriously? How do you suggest I approach this? Many thanks, Lynda

2 comments

Comments (2)

Robert Bennett

Sep 17, 2023

Hi Lynda,

I suggest you ask the trustee for a copy of the valuation to be sent directly to you from the valuer. Request that you be copied in on the email request, or ask the trustee to prepare a signed hard copy request to be mailed to you for on-forwarding to the valuer. I'd do this regardless of whether the diamond is a material asset. If the trustee queries why this procedure in necessary compared with the prior year, use "professional judgement" as the reason rather than any allegation of fraud.

I'd also request that the valuation is at "sell" value if this is not already clear. Diamonds trade at a large buy/sell spread and many valuations are at "replacement" value, i.e. "buy". See classic article https://www.theatlantic.com/magazine/archive/1982/02/have-you-ever-tried-to-sell-a-diamond/304575/

Rob

Lynda MacPherson

Sep 18, 2023

Replying to

Thanks Rob. This vauation is "for insurance purposes" too, which I never like. I have read the article provided - still very relevant. Appreciate your input.