Investment and Other Revenue
Revenue of a SMSF, other than contributions, may include:
- Rental income;
- Unit trust distributions;
- Insurance policy proceeds, rebates and bonuses; and
- Changes in market value – both realised and unrealised.
The audit assertions for revenue received by a SMSF are:
- Occurrence – revenue received by the SMSF is real and has occurred.
- Completeness – revenue received by the SMSF has been recorded.
- Accuracy – revenue received by the SMSF has been recorded appropriately. Changes in market value are based on appropriate and accurate asset valuations.
- Cut-off – revenue received by the SMSF has been recorded in the correct period.
- Classification – revenue received by the SMSF has been allocated correctly, either to the correct members’ accounts or to the asset pool and the tax status of that income is appropriate.
Audit risks to be considered in relation to auditing revenue may include:
- revenue is recognised before it is earned;
- revenue is not being accounted for in accordance with the SMSF’s accounting policies;
- misstatement of changes in market value due to under or overstatement of market valuation; and
Revenue recognition is ordinarily considered a significant risk for a SMSF.