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Nicholas Benbow is the first auditor ASIC has fined over allegedly breaking five-year rotation requirements for listed companies.
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William Buck director fined $20.6k over audit independence concerns
08 April 2024
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ASIC has fined a William Buck director $20,625 over audit independence concerns, marking the first time the regulator has used infringement notices to uphold five-year rotation requirements for listed companies.
ASIC said it had reasonable grounds to believe Nicholas Benbow failed to conduct three listed company reviews in line with the Corporations Act and issued three infringement notices of $6,875 each.
It alleged the Melbourne-based director played a “significant role” as a lead auditor in the half-year reviews of A-Cap Energy, Cohiba Minerals and Unico Silver during March 2023, despite already having done so for the past five years.
Section 307A of the Corporations Act prohibits audit partners from leading the audit of the same listed company for more than five consecutive years, or more than five out of seven successive years.
ASIC commissioner Kate O’Rourke said the prohibition was to prevent over-familiarity between auditors and firms that could threaten auditor independence.
“Independence is one of the cornerstones of the audit process,” she said.
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“Specific audit rotation requirements were introduced 20 years ago to strengthen independence in listed company audits, and the requirements are well known in the industry.”
Benbow has been with William Buck since 2009. He reported the alleged breaches to ASIC under his requirement in section 311 of the Corporations Act.
ASIC said payment of an infringement notice would not be an admission of guilt, but Benbow could be liable to pay up to $12,750 as a maximum penalty for each contravention if established in court.
The enforcement action comes after deputy chair Sarah Court outlined auditor conduct as a key focus area for the regulator this year.
In November, she said ASIC would be taking action against misconduct relating to “gatekeepers” such as auditors who did not comply with their legal obligations.
“We are taking matters to court and pursuing higher penalties than ever before,” she said.
“Our goal is to create a culture of compliance across Australia’s financial system and the corporate sector more generally through decisive and high-profile enforcement action.”
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