ASIC disqualifies and suspends SMSF auditors

The Australian Securities and Investments Commission (ASIC) has announced it has disqualified, suspended or added conditions to the registration for a number of self-managed super funds’ (SMSFs) auditors.

The regulator expressed concerns with regards to SMSFs auditors due to their inability to meet independence and auditing standards, comply with continuing professional development (CPD) requirements and not being a ‘fit and proper person’.

As a result of that, ASIC disqualified the following auditors:

• Kent Hacker of Queensland, for significant auditor independence breaches, deficiencies in auditing asset valuation and compliance arm’s-length transaction requirements, and for otherwise not being a fit and proper person as he had failed to comply with undertakings made to the Australian Taxation Office (ATO).
• Sofranios Vlahos of New South Wales, for significant auditor independence breaches.
• Stephen Sproats of New South Wales, for significant auditor independence breaches and deficiencies in auditing asset valuation and ownership, compliance with arm’s-length transaction requirements, and compliance with borrowing requirements.
• Mark Higgins of New South Wales, for significant auditor independence breaches, deficiencies in auditing asset valuation and compliance with financial reporting requirements, failing to obtain signed financial statements, and breaching CPD requirements. 

Following this, one-year suspension and conditions were also imposed on the following SMSF auditors:

• Ronald Cuthbertson of Western Australia, for deficiencies in auditing the valuation of fund assets, compliance with separation of fund and trustee asset ownership, compliance with related party and arm’s-length requirements, and compliance with personal use and collectable asset rules; and failing to report a fund contravention to the ATO as required.
• Malcolm Heasman of Western Australia, for auditor independence breaches, deficiencies in engaging, planning and performing audits, and deficiencies in auditing the valuation of assets, compliance with separation of fund and trustee asset ownership, and compliance with financial reporting requirements.

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Under the SIS Act, from 1 July, 2013 all auditors of SMSFs have been required to be registered with ASIC in order to meet the base standards of competency and expertise.

Also, ASIC and ATO work closely together as co-regulators of SMSF auditors and the ATO monitors SMSF auditor conduct and may refer matters to ASIC for possible action such as disqualification or suspension of their registration while ASIC may also impose conditions on SMSF auditors.