On 6 July 2021, EC Audit Pty Ltd (EC Audit) (formerly Bentleys NSW Audit Pty Ltd), an authorised audit company, entered pleas of guilty at the Downing Centre Local Court, Sydney, to three charges relating to alleged failure to conduct audits in accordance with auditing standards.
Mr Robert James Evett, director of EC Audit and a registered auditor, also entered pleas of guilty to three charges relating to alleged failure to ensure the audits were conducted in accordance with auditing standards.
EC Audit and Mr Evett are the first auditors in Australia to face criminal prosecution for an alleged failure to comply with auditing standards (sections 989CA(1) and (2) of the Corporations Act).
ASIC’s allegations relate to EC Audit and Mr Evett audits of the profit and loss statements and balance sheets of Halifax Investment Services Pty Ltd for the financial years ended 30 June 2016, 30 June 2017 and 30 June 2018 (21-126MR).
Auditors play a key role in providing confidence in the quality of financial reports. Auditors must comply with all applicable auditing standards and obtain reasonable assurance that a financial report is free of material misstatement. It is important auditors have a strong culture focused on audit quality which ASIC promotes through reviews of selected audits of listed entities and other public interest entities (20-366MR ASIC reports on audit inspection findings for 12 months to 30 June 2020).
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 matter has been adjourned to 10 August 2021 for sentence.
The Commonwealth Director of Public Prosecutions is prosecuting the matter after a referral from ASIC.
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 (21-004MR).
The maximum penalties for the offences occurring before 1 July 2017 are 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 penalties are a $10,500 fine for the charge against Mr Evett and $52,500 fine for the charge against EC Audit.
On 10 August 2021, the sentencing hearing was adjourned until 17 August 2021.