Nexia Perth Audit Services Pty Ltd has paid A$78,250 to comply with an infringement notice issued by the corporate regulator, which alleges the authorised audit company failed to conduct the audit of a listed client in line with independence rules.
The Australian Securities and Investments Commission (ASIC) said it had reasonable grounds to believe Nexia Perth Audit did not carry out the work in accordance with the APES 110 Code of Ethics for Professional Accountants (including Independence Standards). Auditing standards require auditors to follow the applicable requirements of APES 110.
ASIC alleges a network firm of Nexia Perth Audit provided tax calculation services — involving the preparation of current and deferred tax liabilities and assets — to the listed entity while it was an audit client. The non-assurance fees were estimated at A$4,500. ASIC said the services are prohibited under APES 110 because they can create a self-review threat to auditor independence.
ASIC identified the issues through a proactive surveillance focused on auditors’ compliance with independence and conflict-of-interest requirements, and said it would publish its findings soon and expected to announce further action arising from the review.
ASIC Commissioner Kate O’Rourke said, ‘Auditor independence is fundamental to maintaining trust in and integrity of audits. The potential threats to auditor independence where an audit firm also provides non-audit services to an audit client have been the subject of much public debate in recent years. Some non-audit services are prohibited because of the inherent threat they pose. Where ASIC identifies such conduct, we will take action.’
Payment of an infringement notice is not an admission of guilt or liability.
ASIC said the specific reasons for its concerns are set out in the infringement notice on its Infringement Notices Register. Nexia Perth Audit has been contacted for comment.
