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Thursday 13 February 2014

14-028MR ASIC accepts enforceable undertaking from Sydney-based auditors

ASIC has accepted an enforceable undertaking (EU) from two Sydney-based registered company auditors, Martin George Thompson and Allan Ni Kwan Kwok of Wong & Mayes Chartered Accountants.

An ASIC review of an audit of the financial report of Boulder Steel Limited for the financial year ended 30 June 2012 found breaches of auditor independence and rotation requirements. Mr Thompson, after seven years as lead auditor, continued to provide non-audit services during the subsequent two-year prohibited periods, contrary to the Code of Ethics for Professional Accountants.

Mr Kwok, in the role of lead auditor failed to identify and declare Mr Thompson's contravention of the Code of Ethics for Professional Accountants in his 30 June 2012 audit and 31 December 2011 review engagement.

ASIC was concerned that Wong & Mayes' independence quality control systems and processes failed. To address this, Mr Thompson and Mr Kwok will be required to:

  • engage an ASIC approved auditor to review the controls, safeguards and policies relating to compliance with ethical, independence and rotation requirements

  • implement the recommendations of the review, and

  • engage an ASIC approved third party to provide training to all audit partners, consultants and staff on auditor rotation and independence requirements.

Mr Thompson will also participate in an additional 20 hours of continuing professional education on ethics, auditor independence and rotation in the financial year ending 30 June 2014.

He is also required to engage an ASIC approved independent auditor to review the next audits of his top three audit fee-paying clients.

ASIC Commissioner John Price said, ‘Compliance with the independence requirements for auditors is pivotal in fostering market confidence in their opinions and financial reporting in Australia.

‘We expect certain standards to be met and will not hesitate to take action when they are not.’

Download the EUs

Last updated: 13/02/2014 12:00