On 1 August 2022, the former auditor of the collapsed entity Big Un Limited, Graham Rothesay Swan, was convicted for failing to conduct the audit of Big Un Limited in compliance with auditing standards. The audit related to the financial year ended 30 June 2017.
Following his guilty plea, Mr Swan was convicted and ordered to pay a penalty of $2,000. At the time of the offending, the maximum penalty for contravening subsection 307A(2) of the Corporations Act was $10,500. In March 2019, the penalties significantly increased, with the possibility of up to two years imprisonment for individuals or penalties of up to $53,280 for audit companies.
In October 2020, Mr Swan voluntarily cancelled his registration as a company auditor.
ASIC Deputy Chair Sarah Court said ‘Auditors are important gatekeepers to the market and play a key role in ensuring that investors have accurate information when making investment decisions. ASIC has focused on auditor misconduct to ensure auditing standards are met across the industry. This includes referring matters to the CDPP for criminal action and to the Companies Auditors Disciplinary Board (CADB) for cancellations of auditor registrations where misconduct was found.’
Rothsay Auditing were appointed as auditor of Big Un for the financial year ending 30 June 2017 and Mr Swan was the lead auditor. Big Un released its 2017 financial report on 29 September 2017 which included a statutory audit opinion signed by Mr Swan.
In October 2017, Big Un released to the ASX its results for the financial year ending 30 June 2017, based on the audit provided by Mr Swan. The statement to the ASX stated that Big Un’s cash revenue was up 429% with cash and cash equivalents of $9.2 million.
In July 2018, as a result of a direction from ASIC, Big Un issued corrections to its report, including that cash and cash equivalents were not $9.2 million but rather approximately $918,000. Overall, Big Un’s financial position was restated from approximately $1 million in net assets to $9.5 million in net liabilities.
In pleading guilty, Mr Swan admitted, that as lead auditor with primary responsibility for the conduct of the audit, he failed to comply with a number of auditing standards including audit planning, audit documentation, risk assessment and forming his audit opinion.
Big Un was placed into a trading halt and suspended from quotation in February 2018. In August 2018, administrators were appointed to Big Un and it was removed from the official ASX list.
In March 2022, the CADB suspended the registration of Jakin Leong Loke for 12 months due to his involvement as a member of Ecovis Clark Jacobs, which was engaged by Mr Swan to manage the day-to-day activities for the 2017 audit of Big Un (22-049MR).
Mr Swan is the second auditor to face criminal charges for failing to comply with auditing standards after Mr Robert James Evett and EC Audit Pty Ltd, auditors of Halifax Investment Services, were convicted in 2021 (21-218MR).