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Regulatory

Victorian SMSF auditor fails to overturn disqualification

A Victorian-based self-managed superannuation fund (SMSF) auditor will remain disqualified after he failed to overturn ASIC's initial verdict.

ASIC originally disqualified Nazrul Islam, of Clayton South in Victoria, from being an approved SMSF auditor in February last year over his failure to comply with auditing standards; Islam appealled the decision to the Administrative Review Tribunal (ART) on April 17.

The ART affirmed the decision on December 18, finding Islam failed to satisfy the relevant auditing standards on three audit files. It found that Islam failed to perform under the SIS Act, the Superannuation Industry (Supervision) Regulations 1994.

In late 2022, the Australian Taxation Office (ATO) selected three audits compiled by Islam for three different super funds and had expressed concerns.

The ATO referred the matter to ASIC in June on the basis that Islam "failed to carry out or perform adequately and properly the duties and functions of an approved SMSF auditor at Australian law."

As a result, Islam was first disqualified in 2024 and will remain disqualified.

Additionally, the ART also reiterated "clear messages" need to be given to approved SMSF auditors, so that they remain compliant to the regulations, while adding that SMSFs can also be penalised.

"The public needs to be aware that SMSF auditors do not always have a simple job where they simply rubber stamp financial statement," the ART said.

"If the impression is given by an approved SMSF auditor that they perform a simple task for a low fee, that auditor may not be completing the job adequately and properly giving rise to a risk of scrutiny of both the approved SMSF auditors and the SMSFs they audit by the regulators.

"Potential penalties can apply including to the SMSFs."

Meanwhile, ASIC and the ATO work closely to regulate SMSF auditors, and ASIC possess the power to disqualify, suspend, cancel or impose additional conditions on the registration of the auditors.

"Oversight of SMSFs and of approved SMSF auditors by ASIC and the ATO is also critical," the ART continued.

"SMSF auditors provide a necessary check of matters in those financial statements and of the SMSF's compliance with Australian law.

"The integrity of the SMSF system is important and the role of approved SMSF auditors is critical."

Read more: SMSFASICAustralian Taxation OfficeAdministrative Review TribunalNazrul Islam