Halifax Auditors Face First Criminal Charges Laid in Australia

Halifax auditors has become the first audit firm to face criminal charges brought by ASIC in Australia.

June 8, 2021 | AtoZ Markets – The Australian Securities and Investments Commission (ASIC) has brought multiple criminal charges against EC Audit Pty Ltd, previously known as Bentleys NSW Audit and was the auditor of troubled financial service provider, Halifax, the regulator made the announcement on Tuesday.

Additionally, the company’s Director and registered Auditor, Robert James Evett, were mentioned in the indictment. According to ASIC, the firm allegedly breached the Australia's auditing standards, thus resulting in three charges against both EC Audit and Evett.

The lapses were related to the audits of Halifax’s profit and loss statements and balance sheets for the financial years ended June 30, 2016, June 30, 2017 and June 30, 2018.

In breach of sections 989CA(1) and (2) of the Corporations Act (the Act) respectively, EC Audit failed to conduct each of the audits in accordance with auditing standards, and Mr Evett, as the lead auditor, failed to ensure that each of the audits was conducted in accordance with auditing standards,” ASIC alleges.

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EC Audit and Evett have become the first Australian auditors to face criminal charges for violation of audit rules.

The company is now looking at a maximum penalty of A$45,000 for each offense made before July 2017 and A$52,500 for offenses made after that timeline. On the other hand, Evett can face a maximum fine of A$9,000 and A$10,500, respectively, for offenses made around that timeline.

A troubled retail FX brokerage

As a reminder, Halifax was placed in administration in November 2018. It entered liquidation in March 2019. AISC suspended Halifax's Australian financial services (AFS) license back in 2019 and eventually cancelled the license in January 2021.

Under the Corporations Act, ASIC may suspend or cancel an AFS license if the licensee fails to meet its obligations under s912A. This includes the obligation to hold membership in a dispute resolution system.

The company has a right to seek a review of ASIC’s decision at the Administrative Appeals Tribunal.

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