ASIC has cancelled the registration of the auditor of Gippsland Secured Investments (GSI) following a deficient audit of the since collapsed debenture issuer.
Under an enforceable undertaking (EU) with ASIC, Joanne Keng Yee Loh of Morwell, Victoria, has agreed to never reapply for registration or perform any duties or functions of an auditor.
Ms Loh was the lead auditor responsible for the audits of GSI for the 2011 and 2012 financial years. In September 2013, receivers were appointed to the company.
ASIC Commissioner John Price said, ‘Ms Loh failed to properly carry out her work as auditor.
‘Auditors need to be at the top of their game and apply the appropriate standards to ensure that the investing public can have confidence in the financial reports of public companies and debenture issuers.’
An ASIC investigation found Ms Loh did not conduct the audits in accordance with the Australian Auditing Standards. ASIC formed the view Ms Loh failed, among other things, to:
- design and perform audit procedures in relation to loan receivables and obtain sufficient appropriate audit evidence to reduce the risk of material misstatement in the financial reports to an acceptably low level
- display an appropriate level of professional scepticism when auditing the provision for impairment of loans receivable, and when assessing related party transactions and GSI's ability to continue as a going concern, and
- prepare audit documentation sufficiently to enable an experienced auditor to understand the audit procedures performed and evidence obtained.
Background
GSI was an unlisted public company based in the Bairnsdale, Victoria involved in raising funds by issuing debentures and making loans primarily for property investment purposes. The loans were secured by registered mortgages granted by the borrowers in favour of GSI.
In September 2013, receivers were appointed to GSI, with the company’s loan book consisting of 232 loans totalling approximately $117 million and with issued notes/debentures of approximately $143 million to 3,500 account holders.
ASIC has taken action against the auditors of several failed debenture issuers, including Brian Patrick Kingston (Wickham Securities) (refer: 13-156MR) and Warren John Sinnott (Banksia Financial Group) (refer: 14-127MR)