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ASIC has accepted an enforceable undertaking (EU) from the former Banksia lead auditor, suspending him until 2019.
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ASIC suspends auditor for five years
13 June 2014
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As part of an ongoing investigation into the collapse of Banksia Financial Group (Banksia Group), ASIC has suspended Warren John Sinnott of Kennington, Victoria, preventing him from practicing as a registered auditor until 11 June 2019.
Mr Sinnott was the lead auditor responsible for the audits of companies in the Banksia Group – which included Securities Holdco Limited and its subsidiaries, Banksia Securities Limited (Banksia) and Cherry Fund Limited – for the financial years 2009-2012.
As a result of ASIC's investigation, the regulator formed the view that Mr Sinnott failed to carry out or perform adequately and properly the duties of an auditor. In particular, ASIC found Mr Sinnott did not conduct the audits in accordance with the Australian Auditing Standards, as required of him under the Corporations Act 2001 (Corporations Act), according to a statement from the regulator.
In relation to each audit, ASIC formed the view Mr Sinnott failed, among other things, to:
• Perform sufficient audit procedures in relation to loan receivables and obtain sufficient appropriate audit evidence to reduce the risk of material misstatement of loan receivables to an acceptably low level
• Display an appropriate level of professional scepticism when auditing the valuation of, and provision for impairment of loans receivable, and adequately document his conclusion about the reasonableness of the provision for impairment
• Remain alert through the audits that the risk of the potential impairment of loan receivables may cast doubt over Banksia Group's ability to continue as a going concern
• Take responsibility for the overall quality of the audit and provide an appropriate level of supervision and review
• Appropriately conclude that he had obtained reasonable assurance to form an appropriate opinion on the financial report
Under the EU, Mr Sinnott agreed, among other things, to:
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• Participate in a further 10 hours of continuing professional development on audit methodology each year during the period of suspension, in addition to the mandatory professional requirements
• Provide to any client or employer a copy of the EU where he is engaged by them to perform any audit and/or review work for which registration as an auditor under the Corporations Act is not required
• Submit for review to a registered auditor, approved by ASIC, the first three audits conducted by him following the period of suspension that are required to be conducted by a registered company auditor under the Corporations Act and implement any recommendations made by the review auditor
ASIC commissioner John Price said it is important to ensure professional standards in auditing to maintain confidence in financial markets.
"Auditors are important gatekeepers who are relied upon to provide assurance and market confidence in the quality of financial reports. Auditors who fail to adequately perform their duties will be held to account,” he said.
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