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Jean Rey

Oct 30, 2023

Valuation made by trustees

in SMSF Technical Forum

Hi SMSFAAA team,

I am auditing a fund (2022) with investment in an Australian partnership. The investment valued at $95,000 represents 5.14% of the fund's asset at 30/06/2022 (and 8.21% at 30/06/2021). I requested the 2022 partnership's financial statements that the trustees have been chasing for 5 months now.

They prepared a minutes stating that:

"At 94,268.83 the XXX Partnership represents 5.14% of the fund assets at 30 June 2022. The directors noted that during the past year and nearly 4 months Mr.XX (the manager) had been requested on several occasions to supply signed draft accounts for the Partnership for 30 June 2022 and he has been unable or unwilling to do so to date. He has expressed the view that “the valuation is questionable (& potentially zero)”.

RESOLVED: That in view of the current circumstances the Trustee Valuation of the XXX Partnership for 30 June 2022 shall be 1.00.

Would you accept this valuation?

How would you audit this fund?

Thank you very much in advance.

Kind Regards.

2 comments

Comments (2)

Christopher McMullen

Nov 30, 2023

No.

Valuations must come with objective, verifiable supporting evidence for Reg 8.02b purposes.

Trustees cannot be objective by writing "we value XYZ", because they have or maybe have reasons to alter the value to suit (avoiding breaches, TBC limits, pension minimums, etc).

I generally go financials if it's an unrelated 3rd party. If related (which it appears to be), a June 30 bank statement and something to support asset value (basic property valuation, share holdings etc). For these sort of things, I "mini-audit" to ensure they're valued okay for Reg 8.02B.