ASIC disciplines SMSF auditors for misconduct
The corporate regulator has moved to disqualify, suspend and/or add conditions to the registration of a number of SMSF auditors over concerns regarding a variety of forms of misconduct.
The actions arose following concerns about failures to meet requirements, including independence standards and auditing standards, failing to comply with continuing professional development (CPD) requirements and otherwise not being a fit and proper person, ASIC said in a statement.
One SMSF auditor disqualified and another suspended
ASIC disqualified Philip Shugg of Victoria from being an SMSF auditor for not being a fit and proper person as he was bankrupt.
The corporate regulator also suspended for one year and imposed conditions on Greg Marlow of the Northern Territory.
ASIC noted Mr Marlow had significant deficiencies in auditing the ownership and valuation of fund assets, lease agreements, whether transactions were on an arm’s-length basis, and compliance with personal use and collectable asset rules.
Further, Mr Marlow issued an audit report in an incorrect form and did not obtain signed financial statements.
SMSF auditors with conditions imposed on them
ASIC noted that it imposed conditions on the following SMSF auditors:
- John Redenbach of New South Wales – for deficiencies in maintaining auditor independence, and deficiencies in audit work on the ownership and valuation of fund assets and whether a transaction was on an arm’s-length basis.
- Lenneke Serjeant of New South Wales – for deficiencies in maintaining auditor independence, and deficiencies in audit work on the valuation of fund assets, lease and loan agreements, execution of trust deeds and reviewing the investment strategy by trustees.
- Angelo Covelli of Victoria – for deficiencies in audit work on the valuation of fund assets, limited recourse borrowing arrangements, lease agreements and rental statements.
- Darren Tappouras of New South Wales – for deficiencies in audit work on the ownership and valuation of fund assets, in-house asset requirements and limited recourse borrowing arrangements. He also did not obtain signed financial statements and did not comply with CPD requirements.
ASIC said the various conditions imposed across the auditors were:
- Peer reviews – having a number of audits reviewed by an independent SMSF auditor for compliance with auditing standards.
- Independence assessments – performing and reporting on specific independence threat assessments for all clients.
- Restricted audits – being restricted from conducting any audits in independence threat situations regardless of any safeguards.
- Professional associations – providing a copy of the conditions to their professional association.
- Education – completing specific courses of study, including in ethics and audit.
- Tools and templates – reviewing tools and templates to ensure they are up to date and complete.
- Exam – sitting and passing the SMSF auditor competency exam.
- Proof of CPD – providing proof of compliance with CPD requirements annually for three years.
Adrian Flores is the deputy editor of SMSF Adviser. Before that, he was the features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.