Consistent with its surveillance work since the phase-out of the accountants’ exemption last year, the corporate regulator will be targeting those accountants who are new to the AFSL regime. Enforcement activity will be mostly concentrated on accountants providing unlicensed financial advice.
The independence and remuneration of registered liquidators will also be a priority item for ASIC, including referral relationships with pre-insolvency advisers and adequacy of disclosures. In that respect, enforcement activity will be concentrated on declarations of relevant relationships and indemnities, and inadequate remuneration disclosure.
ASIC will also be monitoring registered liquidators who are potentially taking high risks by undertaking a high volume of appointments. This has been ASIC’s focus with auditors in recent years, particularly SMSF auditors who are guaranteeing fast turnaround times.
Audit firms will also be subject to inspection with a focus on asset values, revenue recognition, firm culture, sufficient audit evidence, application of professional scepticism and use of experts.
Large audit firms will continue to be in ASIC’s sights, in particular its action plans as they relate to the quality of audits.
Enforcement work is likely to be targeted at areas of misconduct which compromise registration, with focus again falling on SMSF auditors, which have been required to be registered with ASIC since 2013.
The work of SMSF auditors has been a significant and ongoing area of focus for the regulators since compulsory auditor registration.
The ATO in particular has been publicly warning the SMSF professional community that auditor independence falls within its compliance targets.
“As co-regulators of SMSF auditors, both the ATO and ASIC consider the independence and competency of SMSF auditors, together with the quality of SMSF audits undertaken by registered SMSF auditors, paramount,” said assistant commissioner at the ATO Kasey Macfarlane earlier this year.
“While ASIC is responsible for determining registration eligibility requirements, setting competency standards and taking enforcement action where appropriate, the ATO’s continuing role is to monitor SMSF auditor compliance. In instances where we detect non-compliant behaviours, we refer our concerns about those SMSF auditors to ASIC,” she said.
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