Companies Auditors Disciplinary Board finds BDO audit partner failed to meet minimum standards

A registered company auditor will not be able to audit companies until 2024 after the Companies Auditors Disciplinary Board (CADB) found he failed to meet minimum standards in his audit of ASX-listed technology company Engage: BDR Limited (Engage).

On 30 August 2023, following an ASIC investigation and application, the CADB ordered James Mooney, an audit partner of BDO East Coast Partnership, to undertake not to perform the duties of a registered company auditor until 31 December 2023. The CADB’s decision followed Mr Mooney voluntarily undertaking to ASIC to not act as a registered company auditor between 1 June 2023 to 31 December 2023.

The CADB found that Mr Mooney failed to meet the minimum standard under the Australian Auditing Standards (ASAs) when he failed to obtain reasonable assurance that Engage’s 2018 financial statements were free from the risk of material misstatement.

The most serious matter concerned Mr Mooney’s failure to obtain adequate evidence and perform adequate testing of Engage’s revenue recognition, in breach of the ASAs.

In making its decision, the CADB said, ‘failure to comply with the ASAs in relation to significant disclosure matters such as revenue has the potential to impact Australia’s capital markets and undermine confidence in the integrity of Australia’s capital markets.’

The CADB acknowledged Mr Mooney’s cooperation with ASIC during the proceedings, the fact that his conduct was on the lower end of the scale of seriousness, and that there was no allegation of dishonesty or impropriety.

Mr Mooney has also undertaken to engage another registered company auditor to review his first three company audits from 1 January 2024, and to complete 20 additional hours of professional development. He was ordered to pay ASIC’s costs of $175,000.

ASIC identified Mr Mooney’s failings during its proactive audit surveillance process. Further information can be found at ASIC audit surveillances.

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