Real estate valuations always “at the top of the list of audit results”

Speaking to BDO partner SMSF Adviser, retired Shirley Schaefer warned that SMSF auditors are again paying close attention to real estate investments for audits in fiscal year 2020-21.

Real estate valuations are always at the top of the list, they vary from region to region, but in general you would expect a significant increase until June 30, 21, for most real estate investments, Ms. Schaefer explained.

In some cases, Ms Schaefer said auditors experience some setback from trustees because they may have had the property appraised or appraised on June 30, 2020.

I know listeners say okay if you say it hasn’t increased since June 2020 then [you still need] get confirmation from the person who did the valuation that the value is still relevant and is still relevant because there will absolutely be instances where real estate prices have not changed, but the auditors will not are not real estate agents, Ms Schaefer said.

Property valuation for SMSF has been an area of ​​interest to the ATO and auditors for a number of years, with the regulator issuing various guidance material on what SMSFs should provide to their auditor in order to be successful. comply with pension industry regulation 8.02B. (Supervision) Regulation of 1994.

Evolv’s associate audit director Daria Galstyan told SMSF Adviser in August that while many of the requirements for real estate appraisals are straightforward, some transactions can be more of a gray area.

The required evidence, explained Ms. Galstyan, can become problematic when there are transfers of property in and out of the fund between related parties.

“Most trustees use a direct selling or market comparison approach to support the market valuation of the property,” she said.

“For commercial properties, the problem is the lack of readily available market data, with some properties also being special-purpose in nature. It can be quite difficult for trustees to actually determine market value without enlisting the help of a commercial real estate specialist or registered appraiser.

RELATED TERMS

Property

Property refers to something tangible or intangible over which an individual or business has legal rights or ownership, such as houses, cars, stocks, or bond certificates.

Evaluation

Appraisal is defined as the evidence-based process of appraising the value of a property provided by a qualified professional.

Real estate valuations always “at the top of the list of audit results”



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Last updated: December 23, 2021

Posted: December 29, 2021