ASIC has accepted Douglas Trood's application for the cancellation of his registration as a company auditor following ASIC raising concerns with Mr Trood's alleged failure to comply with auditor independence and conflict of interest requirements under the Corporations Act 2001 and the APES 110 Code of Ethics for Professional Accountants (including Independence Standards).
ASIC's concerns arose from Mr Trood's involvement in the audit of a large proprietary company (including as lead auditor and engagement partner) while:
- maintaining a long association with that audit client over 34 years, and
- having concurrently held various positions as non-executive director (between 1991 and 2004) and secretary (between 1989 and 2004) and non-beneficial shareholder (between and 1990 and 2016).
ASIC was concerned that these matters created significant self-interest and familiarity threats to auditor independence that were not appropriately addressed.
ASIC identified the alleged independence failures through its proactive surveillance of auditor independence and conflicts of interest, which focused on auditors' compliance with independence obligations and used data-driven analysis to detect a range of possible independence issues: Report 817 Building trust: Auditors' compliance with independence and conflict of interest obligations (REP 817).
ASIC Commissioner Kate O'Rourke said, 'Auditor independence is fundamental to trust in Australia's financial reporting system. Auditors must avoid situations where their objectivity is compromised, or could reasonably be seen to be compromised.'
No admissions were made by Mr Trood with respect to ASIC's concerns regarding his auditor independence.
