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AUS: ASIC prosecutes auditors alledging breaches of accounting standards

Editorial Staff

The Australian Securities and Investment Commission has brought the first charges against auditors for breach of accounting standards.

It is alleged that 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 did not properly audit the accounts 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 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 AUD9,000 fine for each charge against Evett and a AUD45,000 fine for each charge against EC Audit. For the offences occurring on or after 1 July 2017, the maximum penalty is AUD10,500 for the charge against Evett and AUD52,500 for the charge against EC Audit.

EC Audit and Evett are the first auditors in Australia to face criminal prosecution for an alleged failure to comply with auditing standards.

Halifax Investment Services Pty Ltd (Halifax), was a financial services licensee headquartered in Sydney with a partially-owned subsidiary in Auckland, New Zealand. It was placed in administration in November 2018 and entered liquidation in March 2019.

Halifax held an Australian Financial Services Licence. ASIC cancelled Halifax’s licence in January 2021.

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