Audits of defunct stockbroker Halifax have resulted in the first criminal charges ever laid in Australia for failure to comply with auditing standards.
EC Audit and its director Robert Evett have been charged with breaches of auditing standards and were mentioned in Downing Centre Local Court today.
ASIC has brought three charges against the auditor relating to the audits of the profit and loss statements and balance sheets of Halifax Investment Services.
The regulator alleges Evett and his company failed to conduct the audits correctly.
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The maximum penalty for the offences occurring before 1 July 2017 is a $9000 fine for each charge against Evett and a $45,000 fine for each charge against EC Audit.
For the offences occurring on or after 1 July 2017, the maximum penalty is $10,500 for the charge against Evett and $52,500 for the charge against EC Audit.
Halifax was placed into administration in November 2018 and entered liquidation in March 2019. ASIC cancelled its AFSL in January 2021.
The regulator had been looking into the company for some time, with ASIC initially finding deficiencies in the business' risk management and compliance processes in April 2013. The firm went into voluntary administration in November 2018 with $19.7 million of client funds having been used to cover operating costs, according to Ferrier Hodgson's report.
"Auditors are important gatekeepers to the market and play a key role in ensuring that financial statements are accurately stated," ASIC said.
"ASIC relies on accurate and reliable audited financial statements to ensure that AFSL holders have sufficient financial resources to conduct their financial services business in compliance with the Act."