ASIC says he failed to obtain sufficient evidence of money held by a broking services firm in which the director was subsequently charged with misusing $35 million in client funds.
Auditor suspended for 3 years for professional failings
The audit regulator has suspended a NSW company auditor for 12 months after an ASIC investigation found he fell short of the standards required for independence and reporting.
Two audits by Rocco (Roy) Luciano Spagnolo failed to comply with requisite standards, the Companies Auditors Disciplinary Board (CADB) found, and he was also ordered to refrain from audits for three years.
Mr Spagnolo, a director of Corporate Audit & Advisory Services, was responsible for auditing the June 2019 and June 2020 financial reports of Alliance Insurance Broking Services, now known as Alliance Management Group.
At the time of the audits, Alliance Insurance Broking Services held an Australian financial services licence.
Following an ASIC investigation and application, the CADB found that Mr Spagnolo failed to adequately perform the duties of an auditor by failing to:
- Obtain sufficient audit evidence of client monies held in trust.
- Plan and perform the audits with an appropriate level of professional scepticism.
- Identify and evaluate circumstances and relationships that could threaten his independence as an auditor.
- Fulfil his reporting obligations to ASIC.
The CADB acknowledged Mr Spagnolo’s cooperation with ASIC and remorse for his conduct, which it factored into its decision.
Mr Spagnolo has undertaken not to audit listed entities or AFS-licensed entities for three years.
In addition, the first three audits following his suspension and the first two audits of AFS-licensed entities after the three-year period will be reviewed by another registered company auditor.
He would also be required to meet certain continuing professional development requirements and was ordered to pay ASIC’s costs of $20,000.
CADB said its proceedings were confidential until it reached a decision and notified the affected parties.
ASIC identified Mr Spagnolo’s failings while investigating Alliance Insurance Broking Services and its director, Renato De Maria, over the alleged misuse of client funds.
Mr De Maria appeared in Mansfield Magistrates’ Court charged with criminal offences relating to the misuse of approximately $35 million of client monies earlier this year.
ASIC alleged that between July 2016 and April 2021, Mr De Maria dishonestly used his position as director of Alliance Insurance Broking Services to misuse money held in trust accounts on behalf of AIBS clients.
Mr De Maria subsequently appeared before Melbourne Magistrates’ Court charged with 17 offences.