The first auditors in Australia to face criminal prosecution have been fined and sentenced for failing to comply with auditing standards.
Robert James Evett, lead auditor, was fined $10,000 while EC Audit was fined $40,000 for its charges relating to audits of profit and loss of Halifax Investment Services Pty for the financial years ended 30 June 2016, 2017 and 2018.
The breaches included Evett failing to take responsibility for the overall conduct of the audits and for ensuring skilled staff were conducting the audits while EC Audit failed to understand Halifax’s business and design appropriate tests to identify material misstatements.
They had previously pled guilty to the charges last month, which were first referred by the Australian Securities and Investments Commission.
The court noted that if the audits of the financial statements had been conducted in accordance with auditing standards, the material misstatements would have been detected and Halifax would have been required to cease trading until sufficient capital was raised for it to meet its financial services licence (AFSL) capital requirements.
ASIC commissioner, Cathie Armour, said: “Auditors are important gatekeepers to the market and play a key role in ensuring financial reports are free from misstatements.
“In taking this action against EC Audit, ASIC is sending a message to auditors to maintain a strong culture focused on audit quality and that any serious failure to comply with auditing standards will be prosecuted.”