A Sydney-based auditor has had his New Zealand licence cancelled for serious breaches of auditing and assurance standards. Photo / 123rf
A Sydney-based auditor has had his New Zealand licence cancelled for serious breaches of auditing and assurance standards. Photo / 123rf
The Financial Markets Authority (FMA) has cancelled the New Zealand licence of Sydney-based auditor Sam Danieli after finding multiple failures stemming from a past audit.
Danieli will not be able to carry out FMC audits in New Zealand or reapply for an audit licence for FMC audits in New Zealandfor three years.
The decisions relate to an audit by Danieli of former FMC reporting entity Alliant Perpetual’s financial statements for the year ended January 31, 2022.
The FMA made orders under section 78 of the AR Act cancelling Danieli’s licence for multiple failures relating to the audit.
During the investigation, Danieli accepted that his conduct fell below the required standard and raised arguments in mitigation, which were considered by the FMA.
Following a review of Alliant Perpetual’s financial statements and auditor’s report, the FMA opened an investigation into Danieli’s conduct of the audit, which found he did not:
Obtain sufficient evidence to support the existence and valuation of Alliant Perpetual’s investments.
Perform a thorough evaluation of management’s assessment of the Alliant Perpetual as a going concern.
Perform the audit with professional scepticism, particularly when assessing the valuation of the investments.
Take responsibility for the overall quality of the audit by completing the audit before the Engagement Quality Control Reviewer had performed an objective evaluation of the significant judgments made by the engagement team.
Obtain external confirmation when assessing Alliant Perpetual’s Cash at Bank.
Obtain reasonable assurance Alliant Perpetual’s financial statements were free from material misstatements.
The FMA also found that Danieli did not comply with the conditions of his licence by failing to notify the FMA that he had accepted other audit engagements, which he had not previously undertaken, and by failing to provide the FMA with details of a separate review of his audit work by the Australian Securities and Investments Commission (ASIC).
Jacco Moison, FMA’s head of auditing, financial reporting and climate-related disclosures, said Danieli’s conduct included serious breaches of auditing and assurance standards.
“The breaches are serious because they were systemic. Although the investigation focused on the 2022 audit of Alliant Perpetual, the broader circumstances illustrate a poor compliance history on Danieli’s part.
“Poor auditing practices, especially in respect of FMC reporting entities, can cause real investor harm and erode the public’s confidence in capital markets.”
Under the Trans-Tasman Mutual Recognition Act 1997 (TTMRA), New Zealand allows recognition of Australian-based auditors.
Alliant Perpetual was a registered building society that was struck off the register in September 2023.
