The corporate regulator has taken action against seven SMSF auditors, including two disqualifications, two suspensions, imposing conditions on three registrations and cancelling the registration of another.
In a public statement, ASIC stated that Strat Karnas of Victoria was disqualified as an SMSF auditor for failing as a trustee of his own SMSF to have the fund audited, falsely representing in annual returns for his own SMSF that the fund had been audited when it had not, and misusing his auditor number to lodge annual returns for his own SMSF.
Keith Knight of the Australian Capital Territory was also disqualified as an SMSF auditor for failing as a trustee of his own SMSF to have the fund audited, falsely representing in annual returns for his own SMSF that the fund had been audited when it had not, and misusing his auditor number to lodge annual returns for his own SMSF.
ASIC also found that Mr Knight had failed to obtain sufficient appropriate audit evidence in SMSF audits on property valuations and title of assets which were not held in the name of the corporate trustee and failed to use the prescribed audit report format.
Trevor Ward of New South Wales had his registration as an SMSF auditor cancelled for failing to comply with continuing professional development requirements, hold an appropriate level of professional indemnity insurance and lodge annual statements for two years.
Ranjit Dadwal of Victoria has been suspended as an SMSF auditor for two years from 30 October 2018 for not being a fit and proper person in that he had received criminal convictions for three offences.
Joseph Carbone of South Australia was suspended as an SMSF auditor for two years from 8 November 2018 for failing to report that an SMSF audited by him had not recorded a property at market value, comply with independence requirements by auditing an SMSF where his staff prepared the accounts and financial statements, and maintain appropriate records of compliance with CPD requirements.
ASIC also imposed conditions on Mr Carbone’s registration to sit and pass the SMSF auditor competency exam, complete a course of study in relation to SMSF audit, have three of his SMSF audits conducted after the suspension period reviewed by an independent SMSF auditor for compliance with auditing standards, and inform his professional association about his suspension and these conditions.
Antonia Christine Quinn of Western Australia had conditions imposed on her registration for failing to obtain sufficient appropriate audit evidence in the audit of an SMSF on whether a lease was on an arm’s length basis and for failing to comply with CPD requirements.
The conditions, ASIC said, require Ms Quinn to sit and pass ASIC’s SMSF auditor competency exam; complete a course of study in SMSF audit; have two of her SMSF audits reviewed by an independent SMSF auditor for compliance with auditing standards; review and revise her SMSF audit tools and templates; adhere to formal CPD requirements specified in the conditions; and provide ASIC with proof that she has complied with CPD requirements annually for three years.
Chooi Beh of Victoria had conditions imposed for failing to obtain sufficient appropriate audit evidence in the audit of an SMSF about the value of unlisted shares and whether monies advanced to the fund were borrowings.
The conditions require Mr Beh to sit and pass ASIC’s SMSF auditor competency exam, complete a course of study in SMSF audit and inform his professional associations about these conditions, ASIC stated.
Information about these auditors, other than Mr Dadwal, was referred to ASIC by the ATO under section 128P of the Superannuation Industry (Supervision) Act 1993 (SIS Act).
ASIC commissioner John Price said that SMSF auditors “play a fundamental role in promoting confidence in the SMSF sector, so it is crucial that they adhere to ethical, auditing and professional requirements. ASIC will continue to take action where the conduct of auditors falls short”.
This all sounds good and I commend the ASIC for taking the action it has but taking a big stick to fix a complicated problem isn’t always the right approach. I think ASIC sometimes just craves publicity to make it look like it is acting effectively. There are cases I know of where ASIC could have adopted a more conciliatory approach by requiring further training rather than just yield the big stick of disqualification. No doubt the motivation for some of the more aggressive ASIC staff members I have dealt with is purely career driven rather than to help tackle the problem of lack of auditor training.