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Wednesday 2 November 2011

11-239MR ASIC accepts enforceable undertaking from North Parramatta auditor

ASIC has accepted an enforceable undertaking (EU) from Mr Stuart Hamilton Cameron of KS Black & Co in North Parramatta following concerns that he is not a fit and proper person to remain registered as an auditor.

Mr Cameron has undertaken that:

  • within seven days after acceptance by ASIC of the EU, he will request ASIC to cancel his registration as an auditor, and that he will not re-apply for registration for five years from the day on which his registration as an auditor is cancelled; and
  • during the time that he is not a registered company auditor, he will not carry out any duty or function that can only be carried out or performed by a registered company auditor.

ASIC Deputy Chairman Belinda Gibson said the resolution of Mr Cameron’s position as a registered auditor was part of ASIC’s priority to lift standards in the financial services and professional services industries.

‘Audited accounts provide confidence to users about the accuracy and integrity of the information contained within those reports. Inherent in this is an expectation that auditors will thoroughly and professionally carry out their responsibilities in forming an opinion.

‘ASIC will take steps to ensure those who fail to discharge their responsibilities appropriately are restricted from participation in the industry’, Ms Gibson said.

The EU follows an investigation into Mr Cameron’s audits of the financial reports of Australian Certification Authority for Reinforcing Steel Limited, Australian Hardwood Management Limited, Adelaide Hills Investments Limited, Australian Rural Investments Limited and Microgenics Diagnostics Pty Limited. Those audits were generally conducted after the commencement, on 26 September 2007, of a nine-month period of suspension, as ordered by the Companies Auditors and Liquidators Disciplinary Board (CALDB) on 28 August 2006.

A few days prior to the CALDB-imposed period of suspension, Mr Cameron signed each of the above auditor’s reports. ASIC is concerned that:

  • at the time of signing each of the above auditor’s reports, Mr Cameron had not performed sufficient audit work in order to properly form the audit opinion stated in each of the respective auditor's reports;
  • the audit work in support of each audit opinion was undertaken between November 2006 and February 2007 during the period of suspension; and
  • the work carried out in support of each audit opinion after the respective auditor’s reports were signed by Mr Cameron, was work that was required in order to properly form the opinion stated in each of the respective auditor's reports.

The EU also follows an investigation of Mr Cameron’s audit of Citigold Corporation Limited for the financial year ended 30 June 2009 (the Citigold Audit). Citigold Corporation Limited is a gold mining company in Charters Towers in Queensland.

ASIC formed the view that Mr Cameron failed to carry out or perform adequately and properly the duties of an auditor. ASIC identified a number of concerns regarding his conduct as lead auditor and was concerned that Mr Cameron failed to ensure that the audit was conducted in accordance with Australian Auditing Standards.

In particular, ASIC was concerned that Mr Cameron failed to ensure that a modified auditor’s report should have been issued, as in ASIC’s view:

  • the valuation of development property in the Citigold financial report was not in accordance with the relevant accounting standards; and
  • as a consequence, the Citigold financial report was materially misstated ASIC notes that Citigold subsequently reduced the value of its development properties by $80,043,376 in its financial report for the half-year ended 31 December 2009, albeit Citigold described the reduction as a change in accounting policy on moving into commercial production. such that Mr Cameron should have issued an adverse opinion for material non-compliance with an accounting standard.

Further, ASIC was concerned that Mr Cameron failed to ensure that there was adequate planning and risk assessment procedures performed for the Citigold audit and that there was sufficient appropriate audit evidence regarding $82 million Exploration, Evaluation and Development Expenditure included in the Citigold financial report.

Mr Cameron has acknowledged ASIC’s concerns.

Download the enforceable undertaking

Last updated: 01/11/2011 12:00