ASIC, Auditing, Compliance

ASIC sanctions 15 auditors

ASIC SMSF auditors APES 110 Code of Ethics for Professional Accountants Independence standards

ASIC has taken enforcement measures against 15 SMSF auditors for breaches of the independence standards, with 13 practitioners having conditions imposed on their registrations.

The Australian Securities and Investments Commission (ASIC) has taken action against 15 SMSF auditors, resulting in conditions being imposed on the registrations of 13 auditors and the voluntary cancellation of two over concerns they were performing in-house audits.

The corporate watchdog stated it sanctioned the auditors after receiving referrals from the ATO following a review of audit firms that undertook both accounting and auditing work for SMSF clients.

The enforcement measures are related to concerns financial statements for SMSF clients were prepared by the same firm that also conducted the audit, in breach of the auditor’s independence requirements.

The conditions emphasise the restriction on performing in-house audits, require an independence review of all SMSF audit clients and notification of the measures to their professional association.

One auditor has applied to the Administrative Appeals Tribunal for a review of ASIC’s decision to impose conditions on their registration.

“Independence is fundamental to auditors to protect the integrity of the SMSF industry. SMSF auditors should carefully consider their structure and any services provided to audit clients to identify and evaluate independence. ASIC will take action where appropriate to reinforce the independence requirements,” ASIC deputy chair Sarah Court stated.

The enforcement action follows concerns expressed by the ATO about the breach of the auditor independence standards stipulated in the APES 110 Code of Ethics for Professional Accountants.

The regulator has previously identified sole practitioners as a potential area of concern regarding compliance with independence standards. A broader industry examination of 60 auditors revealed about 50 per cent of them encountered issues complying with these standards.

Recent ASIC enforcement actions resulted in nine auditors being sanctioned in the December quarter 2023 and measures taken against 11 in the September quarter.

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