16-320MR AAT affirms ASIC decision to disqualify SMSF auditor

 

On 9 September 2016, the Administrative Appeals Tribunal (AAT) upheld ASIC's decision to disqualify Mr Abe Samuel from being an approved self-managed superannuation fund (SMSF) auditor.  

The AAT found that Mr Samuel "plainly breached the auditor independence requirements in APES 110 (Code of Ethics for Professional Accountants). As a consequence, he contravened his professional obligations under s128F of the Superannuation Industry (Supervision) Act 1993."

The AAT was satisfied that Mr Samuel "failed to carry out or perform adequately and properly the duties of an auditor under the Act or the Regulations or as otherwise required by law; and, furthermore or alternatively, the Applicant (Mr Samuel) is not a fit and proper person to be an approved SMSF auditor for the purposes of the Act."

The AAT stated that it upheld ASIC's decision due to "the very serious and fundamental nature of the applicant’s (Mr Samuel's) deficiencies; his longstanding and ongoing failure to understand properly those deficiencies; and the clear need to uphold the integrity of the SMSF system."

ASIC Commissioner John Price noted the AAT finding, saying: "To safeguard the SMSF sector, ASIC will continue to use its power to disqualify approved SMSF auditors that don’t perform their role adequately and meet professional standards."

SMSF trustees and members can check whether their auditor is registered, or whether a person has been disqualified, by searching ASIC's SMSF auditor register at connectonline.asic.gov.au.

Background  

Information about Mr Samuel was referred to ASIC by the Australian Taxation Office (ATO).

On 7 October 2015, ASIC made an order disqualifying Mr Samuel from being an approved SMSF auditor. Mr Samuel requested that ASIC reconsider the disqualification decision. On 23 November 2015, a delegate of ASIC confirmed the decision.

ASIC found that Mr Samuel had breached auditor independence requirements of APES 110 where he was:

  • a member of a fund he audited and also the director of its corporate trustee; and
  • the power of attorney holder for, and a relative of, a member of a fund he audited.

On 18 December 2015, Mr Samuel applied to the AAT for a review of the disqualification decision.

From 1 July 2013, the SIS Act required all auditors of SMSFs to be registered with ASIC. This was to ensure that all SMSF auditors at least meet the base standards of competency and expertise.

ASIC and the ATO work closely together as co-regulators of SMSF auditors. The ATO monitors SMSF auditor conduct and may refer matters to ASIC for possible action such as disqualification or suspension of their registration.

See also 15-362MR ASIC disqualifies Abe Samuel as SMSF auditor.