Auckland accountant Paul Collins has been fined $12,500 plus $2550 in costs for carrying out audit work for a listed company when he had been prohibited from doing so.
The professional conduct committee of the New Zealand Institute of Chartered Accountants found that Collins had acted as the audit engagement partner and signed an audit opinion for "Company Y" in contravention of a direction by the institute's practice review board prohibiting him from doing such work.
The committee said Collins had demonstrated "a complete disregard" for the directions of the practice review board. This was significant, the committee said, because the restriction had been put in place to address earlier shortcomings identified in Collins' performance of audit work for issuers.
While the committee noted that Collins - partner at DFK Carlton - had signed off the audit in his partner's absence, it said that absence was planned.
The committee was particularly concerned there had been no partner involvement or review of the file prior to Collins signing it off and that he had not contacted the institute for direction.
In addition to the monetary penalty Collins was censured by the committee, which said the complaint was serious enough to warrant referral to the institute's disciplinary tribunal.
However, the committee said there were mitigating circumstances which meant an order made with Collins' consent was an appropriate outcome.
The committee took into consideration that Collins had admitted the complaint from the start of its investigation and had been candid about the breach. It appeared the matter was an isolated incident.
The committee also accepted that Collins was genuinely remorseful and that since the practice review, his firm had put in place improved engagement quality control review processes to ensure the situation would not recur.
The NZX said listed companies were required to have their annual financial statements audited by a licensed auditor under the Financial Reporting Act, but they would not breach this requirement only because an audit report was signed by a person not qualified or permitted to sign it.
"There might be further work for a company, for example restatement [of accounts], if there were also material issues concerning compliance with the Financial Reporting Act," an NZX spokesperson said.
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