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ASIC bans SMSF auditor, acts on five others

ASIC action SMSF auditors

ASIC has taken action against six SMSF auditors after receiving referrals from the ATO to examine their level of compliance with legal obligations.

The Australian Securities and Investments Commission (ASIC) has disqualified an SMSF auditor and suspended another as part of an action against six auditors in three different states.

ASIC stated it had disqualified Philip Shugg, of Victoria, from being an SMSF auditor for not being a fit and proper person as he was bankrupt, and had suspended Greg Marlow of the Northern Territory for one year and imposed conditions on him.

Marlow’s suspension was for “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. He also issued an audit report in an incorrect form and did not obtain signed financial statements.

As a result of its action, ASIC will require Marlow to have some of his audits reviewed by an independent SMSF auditor, complete further courses of study, including in ethics and audit, and pass the SMSF auditors competency exam.

The regulator also imposed conditions on the following SMSF auditors:

  • John Redenbachof New South Wales – for deficiencies in maintaining auditor independence, in audit work on the ownership and valuation of fund assets and whether a transaction was on an arm’s-length basis,
  • Lenneke Serjeantof NSW – for deficiencies in maintaining auditor independence, 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 Covelliof Victoria – for deficiencies in audit work on the valuation of fund assets, limited recourse borrowing arrangements (LRBA), lease agreements and rental statements.
  • Darren Tappourasof NSW – for deficiencies in audit work on the ownership and valuation of fund assets, in-house asset requirements, LRBAs, for not obtaining signed financial statements, and not complying with continuing professional development (CPD) requirements.

Each of the four auditors above was given extra compliance conditions, including:

  • having a number of audits reviewed by an independent SMSF auditor for compliance and auditing standards (Serjeant, Covelli and Tappouras),
  • performing and reporting on specific independence threat assessments for all clients (Redenbach and Serjeant),
  • being restricted from conducting any audits in independence threat situations regardless of any safeguards (Redenbach and Serjeant),
  • providing a copy of the conditions to their professional association (Redenbach, Serjeant, Covelli and Tappouras),
  • completing specific courses of study, including in ethics and audit (Redenbach, Serjeant, Covelli and Tappouras),
  • reviewing tools and templates to ensure they are up-to-date and complete (Redenbach),
  • sitting and passing the SMSF auditor competency exam (Redenbach, Serjeant and Covelli), and
  • providing proof of compliance with CPD requirements annually for three years (Tappouras).

The regulator said it took the enforcement action against the six auditors after they (except for Shugg) were referred to ASIC by the ATO under section 128P of the Superannuation Industry (Supervision) Act 1993.

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