Auditors guilty of ethics code breach

Two Auckland accountants who audited failed finance company National Finance 2000 have pleaded guilty to breaching the Institute of Chartered Accountants' code of ethics.

Michael Wood and Bruce Mincham, directors of Auckland accountancy firm O'Halloran HMT, admitted failing to take due care and diligence when auditing the accounts for the year ending 2005 when they appeared at an institute disciplinary tribunal yesterday.

They admitted a range of charges including failure to obtain sufficient corroborative audit evidence about the collectability of National Finance 2000's advances to motor dealers, failure to tell the covenant trustee company in writing that National Finance 2000 had breached its trust deed, and signing an unqualified audit opinion.

Other charges of misconduct and unbecoming conduct were dropped before the hearing.

The pair were censured and ordered to pay the hearing costs of $133,000 between them.

One of the first companies to fail, National Finance 2000 went into receivership in May 2006 owing more than $25.5 million.

The firm, owned by used car dealer Allan Ludlow, gave loans to people buying cars from Payless Cars.

The institute said it was reviewing every audit file from every failed finance company but declined to comment on the likelihood of more tribunals.