ASIC brings criminal charges over Halifax audits

ASIC has slapped the auditors of collapsed broker Halifax Investment Services with criminal charges.

Sydney-headquartered stockbroker Halifax was placed into administration in November 2018. Its auditors are now facing criminal charges. Picture: NCA NewsWire / David Swift

The corporate regulator has slapped the auditors of Halifax Investment Services with criminal charges over their failure to comply with auditing standards over a number of years before the broker’s collapse in 2018.

ASIC has brought three charges each against EC Audit, previously known as Bentleys NSW Audit, and its director and registered auditor, Robert James Evett, relating to audits of Halifax’s profit and loss statements and balance sheets from 2016 through to 2018.

The regulator alleges EC Audit failed to conduct each of the audits in accordance with auditing standards and Mr Evett, as the lead auditor, failed to ensure that each of the audits were conducted in accordance with auditing standards.

They are the first auditors in Australia to face criminal prosecution for an alleged failure to comply with auditing standards.

Sydney-headquartered broker Halifax was placed into administration in November 2018, locking its 12,000 clients out of their more-than $200m investment funds in the process. It entered liquidation in March 2019 and its financial licence was cancelled in January 2021.

Liquidators appointed following its collapse found the broker had propped up the company’s operating losses from at least January 2017 until its collapse.

The broker also co-mingled a chunk of investor money, transferring client funds from one account to another as needed.

In response to the charges, EC Audit said it was cooperating fully with the regulator.

“Since becoming aware of issues with the audit of Halifax Investment Services, and concurrent to ASIC’s ongoing investigation into the matter, Bentleys NSW (EC Audit) has conducted an independent expert review of our audit practice to help ensure that it continues to operate fully in accordance with auditing standards,” the auditor said.

Mr Evett resigned as a director of the company in November and is no longer part of its audit practice.

He is facing a maximum penalty of $9,000 for each charge against the alleged offences that occurred prior to July 2017 and 10,500 for the charge related to offences after that date.

EC Audit, meanwhile, is up for a maximum $45,000 fine for each charge over the offences that took place prior to July 2017, and a maximum penalty of $52,500 for the charge related to offences after that date.

The charges against both EC Audit and Mr Evett have been adjourned to July 6.