Market valuation of SMSF assets critical due to the potential impact of COVID-19 at 30 June 2020

SMSF auditors will be more closely scrutinising the types of audit evidence provided this year including what date it relates to, as both auditors and SMSF clients attempt to navigate the new requirements under COVID-19.

Ensuring SMSF fund assets are valued at market value is extremely important in light of the impact of COVID-19.

Some trustees are definitely going to struggle to provide their auditor with market evidence of market value, which means as your auditor we are going to need to asses the audit evidence in conjunction with the requirements set down by the ATO.

The ATO is likely to consider COVID-19 a significant event, and therefore, we need to question the types of audit evidence we’ve been provided with and also what the date of that audit evidence is as well. It is a basic requirement under ASA 500 which charges the auditor to design audit procedures to obtain sufficient audit evidence.

While Auditors have not changed their procedures in relation to market value, there always seems to be confusion as to what’s required, which will only increase during 2020 and beyond as SMSF professionals and clients try and navigate through the new requirements under the COVID-19 pandemic.

The first place trustees or professionals should look for further clarity on the issue is QC 26343 on the ATO’s website.

The valuation guideline there provides us with a list of valuation requirements for a variety of events such as preparing the fund’s financial statements, collectible and personal use assets, related-party transactions and commencing a pension.

It provides SMSF trustees with the assurance that if they do follow the guide, the ATO will accept that valuation provided.

ATO SMSF auditor portfolio director Kellie Grant said where trustees are experiencing difficulty obtaining valuation evidence due to the impact of COVID-19, they should still attempt to obtain that objective and supportable evidence where they can.“[However], we have released guidance to say that where trustees are impacted by COVID-19 and can’t get that evidence for a particular reason, then the auditor should just note that in the ACR in the description part of the form when they report the event and we will look to take a more lenient approach in regard to that particular breach,” she stated.