Enforceable undertaking for auditor
The Australian Securities and InvestmentsCommission (ASIC) has accepted an enforceable undertaking from the auditor of HIH Insurance, John Buttle.
The undertaking was offered after ASIC said Buttle might have failed to carry out the duties of an auditor in relation to the audit of HIH.
Buttle, a former partner of Arthur Anderson (AA), was engaged to audit HIH’s financial report for 2000, and signed an unqualified audit report with an emphasis of matter in relation to insurance.
The Royal Commission, which delivered its report on the collapse of HIH in 2003, found deficiencies in Buttle’s audit report. However, it acknowledged Buttle’s insistence that HIH report the Pacific Eagle transaction to ASIC.
Due to the findings of the HIH Royal Commission and an investigation, ASIC found that the audit failed to properly manage the risk associated with HIH contrary to its audit procedures manual and auditing standards. It also did not contain sufficient audit evidence regarding income tax balances, future income tax benefits or an assessment of the recoverable amount of deferred acquisition cost.
The undertaking provides for Buttle to be de-registered as an auditor and not re-apply for registration until March 2010.
ASIC took into account that Buttle is not practicing as a registered company auditor, has not signed any audit reports since 2004 and provided ASIC with statements relevant to the criminal proceedings following investigations into the collapse of HIH.
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