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21-126MR Halifax auditors face first criminal charges laid in Australia for failure to comply with auditing standards
On 8 June 2021, criminal charges against EC Audit Pty Ltd (EC Audit) (known as Bentleys NSW Audit Pty Ltd prior to 14 May 2021), an authorised audit company, and its director and registered auditor, Robert James Evett, for breaches of auditing standards were mentioned in the Downing Centre Local Court, Sydney.
ASIC has brought three charges against both EC Audit and Mr Evett relating to audits of the profit and loss statements and balance sheets of Halifax Investment Services Pty Ltd (Halifax) for the financial years ended 30 June 2016, 30 June 2017 and 30 June 2018.
ASIC alleges, in breach of sections 989CA(1) and (2) of the Corporations Act (the Act) respectively, EC Audit failed to conduct each of the audits in accordance with auditing standards and Mr Evett, as the lead auditor, failed to ensure that each of the audits were conducted in accordance with auditing standards.
The maximum penalty for the offences occurring before 1 July 2017 is a $9,000 fine for each charge against Mr Evett and a $45,000 fine for each charge against EC Audit. For the offences occurring on or after 1 July 2017, the maximum penalty is $10,500 for the charge against Mr Evett and $52,500 for the charge against EC Audit.
EC Audit and Mr Evett are the first auditors in Australia to face criminal prosecution for an alleged failure to comply with auditing standards.
Auditors are important gatekeepers to the market and play a key role in ensuring that financial statements are accurately stated. ASIC relies on accurate and reliable audited financial statements to ensure that Australian Financial Service Licence (AFSL) holders have sufficient financial resources to conduct their financial services business in compliance with the Act.
Halifax was an Australian financial services provider that was placed in administration in November 2018. It entered liquidation in March 2019. ASIC cancelled Halifax’s AFSL in January 2021.
The charges against EC Audit and Mr Evett follow an ASIC investigation into Halifax which commenced in 2019. ASIC’s investigation into Halifax continues.
The charges against both EC Audit and Mr Evett were adjourned to 6 July 2021.
The Commonwealth Director of Public Prosecutions is prosecuting the matter.