The Administrative Review Tribunal (ART) has upheld ASIC's decision to disqualify Mr MD Nazrul Islam from being an approved self-managed superannuation fund (SMSF) auditor for failing to comply with auditing standards.
Mr Islam, of Clayton South, Victoria, was originally disqualified from being an approved SMSF auditor in February 2024 (24-215MR). Mr Islam appealed the decision to the ART on 17 April 2024.
On 18 December 2024, the ART delivered its decision to affirm the disqualification, finding he failed to satisfy the relevant auditing standards on three audit files.
The ART’s reasons include that, "The integrity of the SMSF system is important and the role of approved SMSF auditors is critical. Oversight of SMSFs and of approved SMSF auditors by ASIC and the ATO is also critical.”
General Member J Dunne said “Clear messages need to be given to approved SMSF auditors. Those messages include that it is not acceptable for approved SMSF auditors to:
- Withhold material from the regulators.
- Mislead the regulators with submissions you do not correct and later disavow.
- Rely on trustee representation letters as sole audit evidence without more – particularly when considering issues such as market value.
- Not have phone notes on the audit file of important discussions.
- Not document the SMSF auditor’s reasoning on the audit file.
- Ignore or not identify inconsistencies between documents.
- Maintain audit files that an experienced auditor could not pick up and follow.”
The decision also included that, “The public needs to be aware that SMSF auditors do not always have a simple job where they simply rubber stamp financial statements. SMSF auditors provide a necessary check of matters in those financial statements and of the SMSF’s compliance with Australian law. If the impression is given by an approved SMSF auditor that they perform a simple task for a low fee, that auditor may not be completing the job adequately and properly giving rise to a risk of scrutiny of both the approved SMSF auditors and the SMSFs they audit by the regulators. Potential penalties can apply including to the SMSFs.”
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
Approved SMSF auditors are registered with ASIC under the Superannuation Industry (Supervision) Act 1993 (SIS Act).
ASIC and the ATO work closely together as co-regulators of SMSF auditors. The ATO monitors SMSF auditor conduct and can refer matters to ASIC. ASIC also monitors the SMSF auditor population for non-compliance and is empowered to disqualify, suspend, cancel or impose additional conditions on the registration of SMSF auditors.
ASIC may make an order disqualifying or suspending a person from being an approved SMSF auditor, under section 130F of the SIS Act, if the person has failed to carry out or perform adequately and properly the duties and functions of an auditor or is not a fit and proper person to be an approved SMSF auditor. A disqualified SMSF auditor is placed on ASIC’s public banned and disqualified register at connectonline.asic.gov.au and is not eligible to reapply for registration.
SMSF auditors have the right to appeal decisions ASIC makes in relation to them under the SIS Act. They may request that ASIC reconsider a decision it has made against them. If the decision is confirmed or varied the SMSF auditor may apply to the ART for further review of the decision.
Further information can be found on ASIC's website and in Regulatory Guide 243 Registration of self-managed superannuation fund auditors.