ASIC deregisters five SMSF auditors

ASIC said these actions resulted from breaches of obligations including auditing and assurance standards, independence requirements, and registration conditions, or because ASIC was satisfied the individual was not a fit and proper person to remain registered.

Ross Casperson of Bundall, Queensland, was disqualified from being an SMSF auditor in April 2022 for not meeting conditions that were imposed on his registration which included having five SMSF audits peer reviewed and responding to written requests for information within the time specified.

Clifton Hammond of Mirboo North, Victoria, was disqualified from being an SMSF auditor in March 2022 for failing to maintain his auditor independence because he audited his own SMSF and failing to lodge with ASIC an approved SMSF auditor annual statement.

John Pascoe of Nedlands, Western Australia, was disqualified from being an SMSF auditor in March 2022 for not obtaining sufficient appropriate audit evidence and not adequately documenting his audits in significant areas across three funds.

“Specifically, this was in relation to the existence, repayment, and arms-length nature of a loan; ownership and market value of fund assets; ownership of a collectable asset; the level of carried forward tax losses and the appropriate accounting recognition for management fees,” ASIC explained.

Phil Scahill of Parramatta, New South Wales, was disqualified from being an SMSF auditor in March 2022 for failing to lodge with ASIC an approved SMSF auditor annual statement; and otherwise not being a fit and proper person to be an SMSF auditor.

Three SMSF auditors had conditions imposed on their registration due to issues such as breaches of the auditor independence standards or not obtaining sufficient audit evidence.

Andrew Hunt of Parramatta, New South Wales, had additional conditions imposed on his registration in May 2022 for breaching auditor independence requirements by auditing an SMSF for which he prepared the financial statements.

He was also found to have breached the Australian auditing and assurance standards by not obtaining sufficient appropriate audit evidence in relation to a number of fund investments in property, shares and a related trust and an advance payment classified as a sundry creditor.

ASIC stated that Mr Hunt failed to adequately evaluate and document the competence, capabilities, and objectivity of management’s expert and whether evidence from management’s expert was appropriate and reliable. ASIC also noted that Mr Hunt’s engagement letters did not reflect changes to the reporting requirements relevant to the income year audited.

The requirements of the conditions are to:

• Undertake a course of study on conducting SMSF audits
• Have six SMSF audit files reviewed by an independent SMSF auditor
• Conduct a review of his practices and his firm, to ensure compliance with independence requirements
• Review and revise SMSF audit tools and templates
• Pass ASIC’s SMSF auditor competency exam; and
• Provide notification of the additional conditions to his professional accounting association. 

Terence Murphy, of Forster, New South Wales, had additional conditions imposed on his registration in April 2022 for not obtaining sufficient appropriate audit evidence, including market value of properties and compliance with limited recourse borrowing arrangement, in-house asset, related party, and arm’s length provisions.

The requirements of the conditions are to:

• Not perform the audit of any SMSF where it is also a client for the preparation of accounts or financial statements;
• Engage an independent SMSF auditor to review his SMSF audit tools, template and methodology and review three SMSF audit files;
• Pass ASIC’s SMSF auditor competency exam;
• Successfully complete a course on conducting SMSF audits; and
• Provide notification of the additional conditions to his professional accounting association.

John Phillips of Melbourne, Victoria, had additional conditions imposed on his registration in April 2022 for breaching auditor independence requirements where he audited an SMSF for which his staff prepared the financial statements for. ASIC also found that he had not obtained sufficient appropriate audit evidence to support the market value of a number of properties held by a fund and the storage and existence of collectables of another fund.

The requirements of the conditions are to:

• Undertake a course of study on conducting SMSF audits;
• Have three SMSF audit files reviewed by an independent SMSF auditor; and
• Provide notification of the additional conditions to his professional accounting association.

ASIC Commissioner Sean Hughes said ASIC expects SMSF auditors to adhere to the ethical and auditing standards given the fundamental role they play in promoting confidence in the SMSF sector.

“ASIC will continue to take action where the conduct of SMSF auditors is inadequate. These actions help protect the integrity of SMSF audits,” said Mr Hughes.