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Wednesday 22 April 2020

20-094MR ASIC moves against SMSF auditor misconduct

ASIC has acted to disqualify, suspend or add conditions to the registration of a number of auditors of self-managed superannuation funds (SMSFs).

The actions followed ASIC concerns about failures to meet independence and auditing standards, failure to comply with Continuing Professional Development (CPD) requirements and otherwise not being a fit and proper person.

SMSF auditors disqualified

ASIC disqualified the following SMSF auditors:

  • Kent Hacker of Queensland, for significant auditor independence breaches, deficiencies in auditing asset valuation and compliance arm’s-length transaction requirements, and for otherwise not being a fit and proper person as he had failed to comply with undertakings made to the ATO.
  • Sofranios Vlahos of New South Wales, for significant auditor independence breaches.
  • Stephen Sproats of New South Wales, for significant auditor independence breaches and deficiencies in auditing asset valuation and ownership, compliance with arm’s-length transaction requirements, and compliance with borrowing requirements.
  • Mark Higgins of New South Wales, for significant auditor independence breaches, deficiencies in auditing asset valuation and compliance with financial reporting requirements, failing to obtain signed financial statements, and breaching CPD requirements. 

Suspension and conditions imposed on SMSF auditors

ASIC imposed one year suspensions and conditions on the following SMSF auditors:

  • Ronald Cuthbertson of Western Australia, for deficiencies in auditing the valuation of fund assets, compliance with separation of fund and trustee asset ownership, compliance with related party and arm’s-length requirements, and compliance with personal use and collectable asset rules; and failing to report a fund contravention to the ATO as required.
  • Malcolm Heasman of Western Australia, for auditor independence breaches, deficiencies in engaging, planning and performing audits, and deficiencies in auditing the valuation of assets, compliance with separation of fund and trustee asset ownership, and compliance with financial reporting requirements.

Mr Cuthbertson must undertake a peer review process for his audits, complete specific courses of studies, including in ethics and audit, and pass an SMSF competency exam.

Mr Heasman must undertake a peer review process for his audits, certify to ASIC that he has not conducted audits in specific circumstances related to independence, complete specific courses of study, including in ethics and audit, review tools and templates to ensure they are up-to-date and complete, and pass an SMSF auditor competency exam.

Mr Heasman is also restricted from conducting any audits in independence threat situations regardless of any safeguards.

Background

Information about the above auditors was referred to ASIC by the ATO under section 128P of the Superannuation Industry (Supervision) Act 1993 (SIS Act).

From 1 July 2013, the SIS Act requires all auditors of SMSFs to be registered with ASIC. This ensures that all SMSF auditors meet the base standards of competency and expertise.

ASIC and the ATO work closely together as co-regulators of SMSF auditors. The ATO monitors SMSF auditor conduct and may refer matters to ASIC for possible action such as disqualification or suspension of their registration. ASIC may also impose conditions on SMSF auditors.

SMSF trustees and members can check whether their auditor is registered and what conditions are on their registration by searching ASIC's SMSF auditor register. ASIC also maintains a public register of disqualified SMSF auditors. ASIC’s registers are available via connectonline.asic.gov.au.

Last updated: 05/05/2020 03:20