Multiple auditors and multiple audit firms fall short
An Australian Securities and Investments Commission (ASIC) review of some of Australia’s largest and most reputable accounting firms has delivered a damning assessment of the overall quality of audit standards.
The review, released yesterday, found multiple auditors from audit firms of all sizes were unable to effectively demonstrate compliance with independence and conflict obligations and declare that it was not enough to “adopt a tick-a-box approach”.
ASIC’s review found “a disappointing number of likely breaches of prescriptive independence requirements”.
Fifteen auditors were found to be in likely breach of rotation requirements, relationship prohibitions or providing a prohibited non-audit service.
Nine auditors failed to demonstrate how they complied with mandatory rotation requirements that prevent auditors from auditing a listed client for more than five consecutive years.
Five auditors appeared to hold prohibited relationships with clients, including one auditor who was also an officeholder of their client.
It said none of the 15 auditors flagged by ASIC as having breached their obligations had proactively reported the potential breaches to ASIC, despite receiving a reminder from ASIC in October last year.
“The failure of these auditors to report breaches to ASIC, including of the longstanding prescriptive independence obligations, is concerning,” ASIC commissioner, Kate O’Rourke said.
She said that as a result of this review, ASIC accepted the cancellation of a company auditor’s registration for independence failures, issued a $78,250 infringement notice to Nexia Perth over prohibited services, and entered into three court enforceable undertakings with auditors associated with Hall Chadwick (NSW)and the firm over audit rotation failures.
ASIC is conducting additional inquiries into potential breaches identified during this review.
ASIC said the final review cohort of 48 auditors included individual auditors as well as auditors from the following firms:
- BDO Audit Pty Ltd
- BDO Audit (WA) Pty Ltd
- Connect National Audit Pty Ltd
- Deloitte Touche Tohmatsu
- Ernst & Young
- Grant Thornton Audit Pty Ltd
- Hall Chadwick (NSW)
- Hall Chadwick WA Audit Pty Ltd
- Kelly Partners (Sydney) Audit Partnership
- KPMG Australia
- Pitcher Partners
- Nexia Perth Audit Services Pty Ltd
- PKF Melbourne Audit & Assurance Pty Ltd
- PricewaterhouseCoopers
- RSM Australia Partners
- Stantons International Audit and Consulting Pty Ltd
- Trood Pratt Audit & Assurance Services Pty Ltd
- William Buck (QLD) Pty Ltd
- William Buck Audit (WA) Pty Ltd
ASIC chalks up yet another sector of the chain it has totally failed to regulate.
But hey ASIC, let’s never lose focus on a spelling mistake in the still multiple Adviser Fee Disclosure Statements, sorry Adviser Ongoing Fee Arrangements.
FFS ASIC are so misguided.