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12-22MR Astarra Strategic Fund auditor prevented from auditing companies for three years
ASIC has accepted an enforceable undertaking (EU) from the auditor of the failed Astarra Strategic Fund not to act as a registered company auditor for three years.
Albury auditor Timothy Frazer of WHK Audit & Risk Assessment audited the 2008 financial report of Alpha Strategic Fund and the 2009 financial report of Astarra Strategic Fund (ASF).
ASIC was concerned during these audits Mr Frazer failed to perform adequately and properly the duties of an auditor and failed to ensure each audit was planned and performed with an attitude of professional scepticism.
‘One of ASIC’s priorities is to lift standards in the financial services and professional services industries,’ ASIC Chairman Greg Medcraft said.
‘ASIC will not hesitate to ensure auditors who fail to discharge their responsibilities appropriately are restricted from participation in the industry.
‘Today’s announcement is another outcome arising from ASIC’s investigation of Trio Capital and its related entities as we continue to hold gatekeepers to account.’
Specifically, for the 2008 Audit, ASIC was concerned that Mr Frazer failed to ensure:
- sufficient appropriate audit evidence was obtained in relation to the existence and valuation of investments; and
- a sufficient understanding of ASF and its environment, including the operations of EMA International Limited (EMA) and Global Consultants and Services Limited (GCSL) and the investments they made, in order to identify, assess and respond to risks of material misstatement, was obtained.
For the 2009 Audit, ASIC’s concerns were that Mr Frazer failed to ensure:
- sufficient work was performed to adequately consider the professional competence of the other auditors upon whom he relied;
- the work of the other auditors was adequate for his purposes; and
- a disclaimer of opinion was expressed given that the work of the other auditor on whom the audit relied in relation to the existence and valuation of investments had not been concluded as at the date of issuance of Mr Frazer’s opinion.
Under the EU, Mr Frazer will also participate in 15 hours of continuing professional education on audit related matters during the 3 year period, in addition to the mandatory requirements of The Institute of Chartered Accountants in Australia, and submit the first three audits conducted by him following the 3 year period for review by an ASIC approved registered company auditor.
Prior to 3 June 2009, ASF was known as Alpha Strategic Fund.
Other Trio regulatory action by ASIC
As a result of ASIC’s investigation of Trio, to date more than 10 individuals have either been gaoled, banned by ASIC from providing financial services, disqualified from managing corporations or have agreed to remove themselves from participating in the financial services industry for a combined total of more than 50 years. Two of the individuals agreed to lifetime voluntary bannings.
ASIC has entered into EUs with former Trio chairman David Andrews (refer: 11-166MR), and former Trio directors Rex Phillpott and Natasha Beck (refer: 11-133MR), and Keith Finkelde and David O’Bryen (refer: 11-182MR).
ASIC has also accepted an EU from Kilara Financial Solutions Pty Ltd (refer: 11-122AD) and from the former operator of the ARP Growth Fund (ARP), Tony Maher - who changed his name from Paul Gresham - permanently preventing him from working in the Australian financial services industry or managing a corporation (refer 12-15MR).
The Australian financial services (AFS) licence of Seagrims Pty Ltd has been suspended while its directors and responsible managers, Peter Seagrim and Anne-Marie Seagrim, have both been banned by ASIC from providing financial services for three years which was later reduced to six months following an appeal in the Administrative Appeals Tribunal (refer: 11-134AD)
In addition, Shawn Richard, who was a director of the investment manager of the Astarra Strategic Fund, is currently serving a minimum of two and half years in prison after last year pleading guilty to two counts of dishonest conduct in carrying on a financial services business (11-169MR).