Sidhu and Australian Securities and Investments Commission - [2025] ARTA 994

Sidhu and Australian Securities and Investments Commission [2025] ARTA 994 (7 July 2025)
Applicant/s:  David Sidhu
Respondent:  Australian Securities and Investments Commission
Tribunal Number:                2024/0752

Tribunal:General Member J Ross
Place:Canberra
Date:7 July 2025

Decision:The Tribunal affirms the decision under review.

..................................................................
General Member J Ross
CATCHWORDS
SUPERANNUATION – Self Managed Superannuation Fund (SMSF) – where applicant
was disqualified from being an approved SMSF auditor – whether applicant failed to carry out or perform adequately and properly the duties of an approved SMSF auditor – whether failed to comply with auditor independence requirements – whether disqualification order appropriate – specific and general deterrence – integrity of superannuation system – decision under review affirmed
LEGISLATION
Administrative Review Tribunal (Consequential and Transitional Provisions No.1) Act
2024 (Cth), Part 5 of Schedule 16
Superannuation Industry (Supervision) Act 1993 (Cth) – s 5, s 6(1), s10, ss 35B- 35C,
s 62, ss 65-67B, s 71, s 82, s 84, s 104A, s 109, ss 128A -128H, s 129, s130F, s 344
Superannuation Industry (Supervision) Regulations 1994 – reg 4.09,
r 4.09A, r 8.02B and r 13.14
CASES
Australian Securities and Investments Commission v Gilliland [2022] FCA 1421
Brown and Australian Securities and Investment Commission 2009] AATA 286
Henley v Australian Securities and Investments Commission [2024] AATA 82
Howarth and Australian Securities and Investment Commission (2008) 101 ALD
602; [2008] AATA 278
Islam and Australian Securities & Investments Commission (Taxation and
Business) [2024] ARTA 88
Karamian and Australian Securities and Investments Commission [2024] AATA
2006
Panganiban v Australian Securities and Investments Commission (2016) 338
ALR 119
Shi v Migration Agents Registration Authority [2008] HCA 31
Townshend and Australian Securities and Investments Commission [2023]
AATA 3810
SECONDARY MATERIALS
Accounting Professional & Ethical Standards Board, Complied APES 110 Code of Ethnics for Professional Accountants, December 2011
Accounting Professional & Ethical Standards Board, APES 110 Code of Ethnics for Professional Accountants (including Independence Standards), November 2018
Australian Auditing and Assurance Standards Board Guidance Statement GS 009 – Auditing Self-Managed Superannuation Funds
Australian Auditing and Assurance Standards Board, Auditing Standard ASA 230 – Audit Documentation (Auditing Standard, 4 January 2019)
Australian Auditing and Assurance Standards Board, Auditing Standard ASA 500 – Audit Evidence
Australian Auditing and Assurance Standards Board, Auditing Standard ASA 540 – Auditing Accounting Estimates and Related Disclosures
Australian Auditing and Assurance Standards Board, Auditing Standard ASA 550 – Related Parties
Australian Securities and Investments Commission Regulatory Guide 243: Registration of self-managed superannuation funds auditors
Australian Taxation Office Practice Statement Law Administration PS LA 2018/1
Second reading speech on the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012, 19 September 2012, (B Shorten MP), 11169
Statement of Reasons

On 14 October 2024, the Administrative Appeals Tribunal (AAT) became the Administrative Review Tribunal (the Tribunal). Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (the Transitional Act), proceedings in the AAT that were not finalised before 14 October 2024 are to be continued and finalised by the Tribunal. Anything done in relation to the proceeding before 14 October 2024 is taken to have been done by the Tribunal.
The Applicant in this matter, Mr David Sidhu (Applicant or Mr Sidhu), applied to the Tribunal for review of a decision by the Respondent, the Australian Securities and Investments Commission (Respondent or ASIC), to disqualify him from being an approved self-managed super fund (SMSF) auditor under section 130F(2) of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act).
Mr Sidhu was an approved auditor from 6 May 2013 to 30 October 2023.
For the reasons set out below, I have decided that the decision under review is affirmed.
BACKGROUND
On 6 May 2013, Mr Sidhu was registered as an approved SMSF auditor under section 128B of the SIS Act.
In or about October 2002, the Australian Taxation Office (ATO) commenced a compliance review of the audits undertaken by Mr Sidhu for three SMSFs:
(a)R Fund (R Fund) for income year 2019-2020;
(b)C Pty Ltd Superannuation Fund (C Fund) for income year 2018-2019; and
(c)O Superannuation Fund (O Fund) for income year 2019-2020.
(collectively, the Funds)
It has not been alleged that any of the three SMSFs are in breach of the SIS Act. For this reason, on 11 February 2025, I made an order that the names of the Funds and parties connected to them be anonymised.
The outcome of the compliance audits as outlined in the ATO’s position paper was that the Commissioner of Taxation (Commissioner) formed the opinion that Mr Sidhu had failed to carry out or perform adequately and properly the duties and functions of an approved SMSF auditor.
On 13 December 2022, Mr Sidhu was notified by the ATO that a referral had been made under section 128P of the SIS Act on the basis that Mr Sidhu failed to carry out or perform adequately and properly the duties of an auditor under the SIS Act and Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations).
On 23 January 2023, after considering the ATO referral, ASIC sent a ‘show cause’ letter to Mr Sidhu advising him that consideration is being given to making an order to disqualify, suspend or impose conditions on his SMSF registration.
On 7 February 2023, Mr Sidhu responded to the ‘show cause’ letter stating that, among other things, disqualification in the circumstances would be an ‘unjust action’ and that imposing conditions would be more suitable.
On 30 October 2023, ASIC advised Mr Sidhu of the decision to disqualify him from being an approved SMSF auditor with effect from 3 November 2023.
On 28 November 2023, Mr Sidhu requested a review of the decision to disqualify him as an SMSF auditor.
On 11 December 2023, Mr Sidhu was advised by ASIC that following a review, the decision to disqualify him had been confirmed.
On 8 February 2024, Mr Sidhu applied to the Tribunal for review of the Decision.
The decision under review is the decision made by the Respondent on 30 October 2023 to disqualify the Applicant from being an approved SMSF auditor, which took effect on 3 November 2023 and was subsequently confirmed by a delegate of ASIC, the Respondent, on 11 December 2023 (Reviewable Decision).
THE ISSUE BEFORE THE TRIBUNAL
The issues for determination by the Tribunal are:
(a)whether Mr Sidhu failed to carry out or perform adequately and properly the duties of an approved SMSF auditor;
(b)whether Mr Sidhu failed to comply with auditor independence requirements in the SIS Act and Regulations; and
(c)if so, was it appropriate for ASIC to have disqualified Mr Sidhu from being an approved SMSF auditor.
KEY STATUTORY PROVISIONS
Sections 5 and 6 of the SIS Act sets out the functions, powers and duties of ASIC and the Commissioner in administrating the Act. The Commissioner is generally responsible for SMSF, and ASIC is generally responsible for ‘protecting consumers from harm, market integrity, disclosure and record keeping’.
SMSF auditor professional standards
Section 35B of the SIS Act requires trustees of an SMSF to prepare, sign and retain accounts and statements. Section 35C of the SIS Act further requires trustees to ensure for each income year that an approved SMSF auditor is appointed to give the trustee a report, in the approved form, on the operation of the entity for that year. Section 35C(5) of the SIS Act relevantly provides that the approved form must include a statement by the auditor as the extent of the auditor’s compliance with auditor independence requirements in subsection 128F(d) of the SIS Act.
Section 128F of the SIS Act imposes a range of professional obligations on approved SMSF auditors.
Subsection 128F(c) of the SIS Act requires an SMSF auditor to comply with:
(a)any competency standards that the Regulator determines under section 128Q;
(b)any auditing standards, made by the Auditing and Assurance Standards Board (AASB) under section 336 of the Corporations Act 2001, that are applicable to the duties of an approved SMSF auditor under this Act; and
(c)any auditing and assurance standards, formulated by the Auditing and Assurance Standards Board under section 227B of the Australian Securities and Investments Commission Act 2001 (Cth), that are applicable to those duties.
Guidance Statement GS 009 Auditing Self-Managed Superannuation Funds (GS 009) was issued by the AASB pursuant to section 227B of the ASIS Act. The version issued on 30 September 2015 is the relevant version to the matter before me based on the audit completion dates. GS 009 listed the key Auditing Standards (ASA) which are relevant to the conducting of a financial audits of SMSFs relevant to this matter:
(a)ASA 500 Audit Evidence,
(b)ASA 230 Audit Documentation.
Subsection 128F(d) of the SIS Act requires an SMSF auditor to comply with ‘the auditor independence requirements prescribed by the regulations’. Regulation 9A.06 of the SIS Regulations state:
For paragraph 128F(d) of the Act, the auditor independence requirements produced by the Accounting Professional and Ethical Standards Board Limited and set out in the APES 110 Code of Ethics for Professional Accountants (including Independence Standards) are prescribed for all approved SMSF auditors.
The Accounting Professional & Ethnical Standards Board (APES) 110 Code of Ethics for Professional Accountants Standard (including Independence Standards) (2010) effective from 1 July 2011 has been updated several times, including significant revisions issued in November 2018 effective from 1 January 2020 (APES 110). APES 110 sets out a conceptual framework which requires Members to identify threats to compliance; evaluate those threats and address the threats by eliminating them or reducing them to an acceptable level.
Paragraph 540.3 A1 of APES 110 2020 explains that a familiarity threat might be created as a result of a member of an audit team having a long association with the audit client. Paragraph 540.3 A2 explains how a self-interest threat might be created as a result of an individual’s concern about losing a long-standing client and that such a threat might influence the individual’s judgement inappropriately.
Paragraph 540.3 A5 provides an example of action to eliminate the familiarity of self-interest threats. Paragraph 540.3 A6 provides examples of how to reduce the threats to an acceptable level by deploying safeguards.
Paragraph R601.5 provides that a firm shall not provide an audit client accounting and bookkeeping services, including preparing financial statements, unless the firm addresses any threats created by providing such services to an acceptable level.
SMSF auditor disqualification
Section 130F of the SIS Act provides for ASIC to order that an approved SMSF auditor be disqualified or their registration suspended. Subsection 130F(2) of the SIS Act relevantly states:
(2) The Regulator may make a written order disqualifying a person from being an approved SMSF auditor, or suspending a person's registration as an approved SMSF auditor, if:
(a) the person has failed, whether within or outside Australia, to carry out or perform adequately and properly:
(i) the duties of an auditor under this Act or the regulations; or
(ii) any duties required by a law of the Commonwealth, a State or a Territory to be carried out or performed by an auditor; or
(iii) any functions that an auditor is entitled to perform in relation to this Act or the regulations or the Financial Sector (Collection of Data) Act 2001; or…
(d) the person is otherwise not a fit and proper person to be an approved SMSF auditor for the purposes of this Act.
CONSIDERATION
I have considered all the material that has been put before the Tribunal; the evidence presented at the hearing by Mr Sidhu and Mr Abbott and the closing written and oral submissions of both parties.
ASIC’S substantial concerns with Mr Sidhu’s audit conduct
The failures outlined in the ATO’s Position Paper in relation to the three SMSFs fall into three broad categories and were initially:
(a)failure to adhere to auditing and assurance standards (section 128F of the SIS Act)
(b)failure to report a reportable contravention of the SIS Act and SIS Regulations (section 129 of the SIS Act), and
(c)failure to adhere to auditor independence requirements in APES 110.
The ATO review of the three SMSFs was prompted by a compliance concern. On 24 May 2022, a phone interview was conducted during which Mr Sidhu was advised of the Funds selected for review and was required to provide all audit files.
The ATO received the audit files from Mr Sidhu on 1 June 2022, along with the signed declaration advising that all information and documents he had relied upon to form his audit opinion had been provided. However, in response to issues raised by the ATO in its position paper, Mr Sidhu subsequently provided further documents to the ATO.
A number of concerns were set aside from the original referral from the ATO. These concerns include those around Mr Sidhu’s failure to report contraventions consistent with section 129 of the SIS Act which is triggered where the auditor has formed an opinion about a likely contravention. This concern was set aside because the Respondent could not conclude whether Mr Sidhu had formed a relevant opinion.
The first issue for consideration is whether the Applicant failed to carry out or perform adequately and properly the duties of an approved SMSF auditor.
The provision of audit files to the ATO and the written declaration by Mr Sidhu
The Respondent submits in its closing submissions that one of the significant challenges in this matter is the manner in which Mr Sidhu provided documents to the ATO. Despite confirming that all documents had been provided and further declaring that all information is true and correct, Mr Sidhu subsequently provided the ATO with a raft of further documents in response to the issues raised.[1]
[1] Respondent’s closing submissions at [18].
The Respondent submits that, even if it is to be assumed that Mr Sidhu had these documents at the time of his audits and did have regard to them, it still raises concerns about why he would sign a declaration which was false and about the nature of his file management.
Before the Tribunal, Ms Sidhu explained that he believed that, at the time of signing the declaration, he thought that everything that was needed was in the file.[2] Further, he explained that if anything further was needed it could be provided.[3] In response to the question about whether he understood the importance of providing true and correct declarations to regulators, he responded ‘yes’.[4]
[2] Transcript of proceedings at [P-20:15-20].
[3] Ibid.
[4] Transcript of proceedings at [P-19: 45].
The three signed declaration documents form part of the evidence for this case.[5] I have examined these declarations. In these declarations, I can see that Mr Sidhu has confirmed that all the information and documents he relied upon to form his audit opinion had been provided, including the audit working papers file and the permanent file, when they were not. This makes the declarations false. In the Applicant’s closing submissions, it is contended that Mr Sidhu’s evidence shows an acknowledgment of error and contrition.
[5] Exhibit 2.
I consider that Mr Sidhu adopted a cavalier attitude to the signing of the declaration and, as will come to light further in the considerations below, it does not appear that Mr Sidhu always had those documents at the time of the audit, or if he did he was unable to have regard to them because of poor file management and audit practices. This casts some doubt regarding Mr Sidhu’s integrity. However, I have not found it necessary to conclude whether he created some documents to satisfy the ATO as regardless there has been a failure to comply with auditing standards.
Meaning of ‘adequately and properly’
When considering whether Mr Sidhu failed to carry out or perform adequately and properly the duties of an approved SMSF auditor under the SIS Act and the SIS Regulations, I am guided by previous Tribunal decisions that have considered the meaning of ‘adequately and properly’. In particular, in Brown and Australian Securities and Investments Commission,[6] Deputy President Forgie considered the meaning of ‘adequately’ in the context of carrying on a financial service business under a licence. The Deputy President stated that a consideration of whether a person has done something adequately requires a consideration of whether that person has done so competently. The Deputy President also considered the meaning of ‘properly’ and stated that a consideration of whether the person has done so ‘properly’ ‘goes beyond notions of adequacy to encompass notions of appropriateness and of propriety.
Compliance with auditing and assurance standards – prepare sufficient documentation as required by ASA 230
[6] [2009] AATA 286.
The Applicant submits that GS 009 does not prescribe what documentation is required to conduct an SMSF audit, but requires that an SMSF auditor have documentation:
‘sufficient to enable an experienced auditor… to understand the results of the audit procedures performed, the audit evidence obtained, significant matters arising during the audit, the audit conclusions reached thereon and significant professional judgments made in reaching those conclusions…’
The Respondent submits that it is clear using the wording of ASA 230 that Mr Sidhu’s files were kept in such a manner that an experienced auditor having no previous connection with the audit would not have been able to understand those things. The Respondent further submits that the hypothetical experienced auditor would have to essentially re-do the audit by compiling together the documents on which Mr Sidhu now says he relied and also by questioning Mr Sidhu as to his personal knowledge.[7]
[7] Respondents Statement of Facts Issues and Contentions at [128]-[129].
The Applicant contends that all relevant evidence was available to him as an experienced SMSF auditor to perform his audits. The Applicant contends that there has been no breach of ASA 230, and further, there is no precedent for the disqualification of an SMSF auditor due to their record keeping practices or for not providing all records during an ATO audit.
An exchange occurred during cross-examination in relation to the R Fund which I consider provides useful insight into Mr Sidhu’s documentation processes. When asked by Counsel if he was familiar with the auditing standard that relates to the level of documentation needed to be retained, his response was ‘yes’ and that in the past his view of a file was ‘everything’. He expressed this as:[8]
I was deeming as an audit file being, you walk through the door and now a file is the whole office. So my work file at that point was the whole office, not just that one document.
[8] Transcript of hearing at [P-33: 5].
As such, at first, he did not accept that such a practice was in breach of ASA 230. However, when pressed further on the issue of whether an independent external auditor with no connection to the audit could have picked up his file and understood matters, he conceded that in that context he was in breach.
Compliance with auditing and assurance standards – obtain sufficient audit evidence as required by ASA 500

The Applicant submits that Mr Sidhu’s Affidavit provides evidence that he had all the relevant information he needed as an experienced SMSF auditor to perform his audit of the three Funds consistent with requirements in GS 009.[9]
[9] Applicant’s Amended Statement of Facts, Issues and Contentions at [21].
The Respondent directed me to the guidance in GS 009 which provides:
ASA 500 Audit Evidence requires the auditor to design and perform audit procedures that are appropriate in the circumstances of the engagement, for the purpose of obtaining sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the audit opinion. It requires the auditor to consider the relevance and reliability of the information to be used as audit evidence which includes the documentation of their testing and how the results may impact the audit opinion.
The Respondent submits that ‘sufficiency’ in this context is the measure of the quantity of the audit evidence and ‘appropriateness’ is the measure of its quality.[10] The Respondent further submits in considering what amounts to reliable audit reference should relevantly be made to ASA 500 which favours evidence obtained from independent and direct sources over evidence obtained indirectly or by inference.
[10] Respondent’s closing submissions at [25].
Below I consider Mr Sidhu’s compliance with the audit documentation requirements in ASA 230 and audit evidence requirements in ASA 500 in relation to the three Funds.
The R Fund
In relation to the R Fund, ASIC submits that Mr Sidhu failed to prepare sufficient documentation as required by ASA 230 in relation to:
(a)signed trustee declaration
ASIC also submit that Mr Sidhu failed to obtain sufficient audit evidence as required by ASA 500 to support:
(b)ownership of commercial property and charges over the assets;
(c)the market value of the Fund’s commercial property; and
(d)whether the Fund’s bank loans were limited recourse borrowing arrangements (LRBA).
Signed trustee declaration
On the issue of the audit file submitted to the ATO not containing signed trustee declarations in relation to the R Fund, Mr Sidhu’s evidence was that he understood the relevant obligation and that the declaration was not in the audit file because it was in the trust register.
The Respondent submits in its written closing submissions that not only is there a requirement under the SIS Act for the auditor to obtain and cite the relevant trustee declarations to ensure they have been made and are in the correct form, but also to ensure they are retained.[11]
[11] Respondent’s closing submissions at [27].
When asked during cross-examination why he has not provided the physical document to the ATO or ASIC in these proceedings for the other trustee, Mr Sidhu’s evidence was ‘I should have done, but I did not’. Mr Sidhu’s evidence was also that they now use a system that allows auditors to have access to all documents to ‘go in and check’, but back then it was different because they had the trust’s register which contained the physical document. Mr Sidhu’s evidence was that the declaration was in the trust register because that is where it stays.[12] Mr Sidhu’s evidence was also that he did not put in on the audit file because back then everything was kept ‘in house’, i.e. on the trust register.[13]
[12] Transcript of hearing at [P23: 20-35].
[13] Ibid at [40-45].
Mr Sidhu’s evidence also was that he provided the documents afterward but was advised by ASIC that, for this trustee, no more documents were going to be accepted.[14] His evidence was that he would have also sighted the trustee declarations during the audit of the R Fund.[15]
[14] Ibid at [15-20].
[15] Ibid at [30].
I consider Mr Sidhu to be in the main a credible witness. He attempted to answer the questions put to him in an honest way, although some of his responses lacked clarity and at times were diffuse and circuitous.
On this issue, I accept Mr Sidhu’s evidence. However, I also find there has been a failure to comply with ASA 230 in relation to audit documentation. Mr Sidhu’s evidence displays that the files were kept in a manner that required prior knowledge or experience of the R Fund and the operation of International Professional Services (IPS) in order to understand, among other things, the audit conclusions, results and the procedures performed.
Ownership of commercial property and charges over the assets
On the issue of Mr Sidhu failing to obtain sufficient, appropriate evidence to establish ownership of property by the R Fund, Mr Sidhu’s evidence given at the hearing was that the documents on file may not have been sufficient from the ATO’s point of view, but from his they were.[16]
[16] Ibid at [P24: 45 and P25: 5].
As stated in the Applicant’s closing submissions, as cross-examination ensued Mr Sidhu ultimately accepted that he had failed to obtain sufficient evidence to establish ownership of the property and whether it was charged by doing a title search.[17] The Applicant’s closing submissions highlighted this as a clear acknowledgement and acceptance of error by Mr Sidhu.[18]
[17] Applicant’s closing submissions at [21].
[18] Ibid at [8].
I will consider Mr Sidhu’s remorse when considering the appropriate sanction. My observations on this issue are that it displays that instead of seeking independent external evidence to verify matters, Mr Sidhu relied upon indirectly obtained evidence or evidence obtained in the past to confirm positions. He also relied on his knowledge of the client and the relationship his client had with his firm to be informed of changes like a charge being placed on a property. My observation also is that there was a reluctance to place the evidence that there was on the audit file if it was contained on another IPS file. As will come to light below this is a pattern of behaviour.
Market valuations
On the issue of Mr Sidhu failing to obtain sufficient, appropriate audit evidence that the R Fund Investment Property was recorded at market value in accordance with regulation 8.02B of the SIS Regulations, Mr Sidhu’s evidence in the hearing was that it was the trustee’s responsibility to ascertain market value, he would then review that value and go back to the trustee if he considered it not appropriate.[19]
[19] Ibid at [25].
I accept the Respondent’s submission that it is the auditor’s responsibility to obtain evidence that the valuation provided is reasonable and supportable, including by reference to current, independent and robust information.[20] I find there has been a failure to obtain sufficient, appropriate audit evidence in order to ensure compliance with regulation 8.02B of the SIS Regulations.
[20] Respondent’s closing submissions at [10].
Borrowings
On the issue of Mr Sidhu failing to obtain sufficient, appropriate audit evidence to support whether the loans recorded in the R Fund were limited resource borrowing arrangements (LRBA), Mr Sidhu’s evidence was, although the audit file provided to the ATO did not include a copy of the LRBA with the relevant bank, he did have them and didn’t think that it was needed to be forwarded to the ATO.[21]
[21] Transcript of hearing at [P-34: 10-15].
The evidence contained in Mr Sidhu’s Affidavit and provided at the hearing displays his inadequacies in obtaining sufficient audit evidence:
(i)It was not on the audit file provided to the ATO because the document would have been in prior years’ files;
(ii)the LRBA was kept on a different file at IPS, he sighted it and saw no need to make a copy and put in on the audit file;[22] and
(iii)he did not proactively check to see if changes had occurred, but instead relied on being notified or it being raised by the IPS accountant who did other work for the trustee.
[22] Mr Sidhu’s Affidavit at [8].
Therefore, I accept the Respondent’s submission that reliance on assumptions made only possible because of Mr Sidhu’s familiarity with the Fund demonstrates a misunderstanding of his extent of his obligations as an SMSF auditor.[23]
[23] Respondent’s closing submissions at [44].
As the Applicant’s submission points out, the Respondent’s criticisms with respect to the R Fund apply ‘mutatis mutandis’ to the C Fund and the O Fund.[24] Likewise, Mr Sidhu’s evidence regarding those Funds largely follows his evidence concerning the R Fund.[25] The Applicant’s counsel submits, therefore, that what is important about the C and O Fund is not the compliance issues themselves but Mr Sidhu’s acknowledgement of fault, the taking of responsibility, expression of contrition and the commitment to do better in the future.[26]
[24] Applicant’s closing submission at [30].
[25] Ibid.
[26] Ibid at [31].
Although I appreciate this may be the case, set out below are my brief conclusions as to compliance with auditing and assurance standards as required by section 128F SIS Act in relation to ASIC’s concerns with these Funds.
C Fund
In relation to the C Fund, ASIC submits that Mr Sidhu failed to prepare sufficient documentation as required by ASA 230 in relation to:
·Fund’s ownership of assets;
·signed accounts and statements; and
·the Fund’s borrowings.
ASIC also submit that Mr Sidhu failed to obtain sufficient audit evidence as required by ASA 500 to support:
·the Fund’s investment in an unlisted unit trust complied with in-house asset rules;
·the rental income from the Fund’s property was at arm’s length;
·trustees had a current investment strategy and given effect to it;
·the market value of the Fund’s properties; and
·that the charges held over properties are allowable.
(a)Ownership of assets – after considering the evidence and the parties’ submissions, I am satisfied there was a failure to obtain sufficient, appropriate audit evidence or prepare sufficient audit documentation regarding the Fund’s ownership of an investment in the K Unit Trust. Although relevant documents may have been available to Mr Sidhu and reviewed by him, similar inadequacies as identified in relation to the R Fund outline above are also evident here.
(b)Signed accounts and statements – after considering the evidence and the parties’ submissions, I am satisfied there was a failure to obtain sufficient, appropriate audit evidence regarding the Fund’s accounts and statements. Mr Sidhu’s evidence was that signed financials were not on the audit file but on another file maintained by IPS; that ‘we would have’ viewed them, meaning IPS; that his ‘junior’ would have checked them; that the incorrect date of 2018 being contained on the 2019-2020 financial year statements was something his junior should have noticed but in any event he did not check.[27]
[27] Transcript of hearing at [P46:36-47; 38].
(c)Borrowings – after considering the evidence and the parties’ submissions, I am satisfied there was a failure to obtain sufficient, appropriate audit evidence regarding borrowing arrangements and whether or not the loan was compliant. Mr Sidhu’s evidence was that the audit file should have contained a copy of the loan terms and a notation regarding the loan’s compliance with section 67 of the SIS Act.[28] Mr Sidhu’s evidence was that he was unable to provide a copy of the loan agreement to the ATO or ASIC because they were on the IPS client files that the client had taken.[29] He also said that as the client now had significant health concerns he had been hesitate to ask for them back.[30]
[28] Ibid at [P51:38-40].
[29] Ibid.
[30] Ibid, [P-53:35].
(d)In-house assets – after considering the evidence and the parties’ submissions, I am satisfied there was a failure to obtain sufficient, appropriate audit evidence in relation to the Fund’s compliance with the in-house asset rules. Mr Sidhu’s evidence was that he accepts there was nothing on file to demonstrate his conclusion that the Fund’s unit holding in K Unit Trust and the loan unit trust made to the members predated the in-house asset rules.[31]
[31] Ibid, P-56:25-30.
(e)Investment held on an arms-length basis – after considering the evidence and the parties’ submissions, I am satisfied there was a failure to obtain sufficient, appropriate audit evidence to support that the Fund’s investment property was maintained on an arms-length basis. Mr Sidhu’s evidence was that, because of the short-term nature of the leasing arrangement at the complex within which the property was situated and the personal circumstances of the trustees at the time, he assumed the property was not being used by related parties but obtained no evidence to support that assumption.[32]
(f)Investment strategy – after considering the evidence and the parties’ submissions, I am satisfied there was a failure to obtain or adequately document the Fund’s compliance with the requirement in regulation 4.09 of the SIS Regulations that trustees have an investment strategy. Mr Sidhu’s evidence was not to deny this but to provide a reason for its omission, being that the trustees were going through a divorce, and so they were selling down all the assets.[33] As the Respondent submits, that is an investment strategy that could have been recorded.[34]
(g)Market valuation – after considering the evidence and the parties’ submissions, I am satisfied there was a failure to obtain sufficient, appropriate audit evidence to support that the Fund’s investment properties were recorded at market value in accordance with regulation 8.02B of the SIS Regulations. Mr Sidhu’s evidence displayed his knowledge of the history of the property’s value, despite this, he did not document that knowledge but relied on:
(i)an appraisal letter from a real estate agent;
(i)representations from the trustees that they believed the value had not changed; and
(ii)a search of the property’s sale history which included its listing price.
Mr Sidhu conceded that he should have done more as he understood and appreciated the importance of market values.[35]
(h)Charges – after considering the evidence and the parties’ submissions, I am satisfied there was a failure to obtain sufficient, appropriate audit evidence to demonstrate compliance with regulations 13.15 and 13.15A of the SIS regulations. Like in the case of the R Fund on this issue, Mr Sidhu’s evidence was that he accepted that he did not, but should have, conducted a title search.[36]
[32] Ibid, P-56: 35-40.
[33] Ibid, P58: 42-P59: 10.
[34] Ibid.
[35] Ibid, P-60: 15-20.
[36] Ibid, P-61: 25-30.
O Fund
In relation to the O Fund, ASIC submits that Mr Sidhu failed to prepare sufficient documentation as required by ASA 230 in relation to:
·the ownership of the Fund’s bank account; and
·signed financial statements.
ASIC also submits that Mr Sidhu failed to obtain sufficient audit evidence as required by ASA 500 to support:
·the Fund’s borrowing agreement was at arm’s length;
·the Fund’s borrowing from a fund member complied with borrowing exceptions;
·the rental income from the Fund’s properties was at arm’s length;
·the market value of the Fund’s properties; and
·that there was no charge held over the Fund’s commercial property.
The Applicant submits similarly in relation to this Fund as for the C Fund, pointing to Mr Sidhu’s acknowledgements of acceptance, regret and shortcomings.
Set out below, are my conclusions as to compliance with auditing and assurance standards as required by section 128F of the SIS Act in relation to ASIC’s concerns with this Fund:
(a)Ownership of Fund’s bank account – after considering the evidence and the parties’ submissions, I am satisfied there was a failure to obtain sufficient, appropriate audit evidence to support the Fund’s ownership of a specific bank account. Mr Sidhu’s evidence was that he accepts there was a deficiency in his recordkeeping practices of recording the checks and verification he undertook of the bank account using his online access to the particular account.[37]
[37] Ibid at P-63: 5-15.
(b)Signed financial statements – after considering the evidence and the parties’ submissions, I am satisfied there was a failure to obtain sufficient, appropriate audit evidence regarding the Fund’s financial statements. Mr Sidhu’s evidence was that there were no financial statements on the audit file, however, a copy of the financial statements were ‘in our system’.[38]
[38] Ibid at P-63: 11-20.
(c)Borrowings – after considering the evidence and the parties’ submissions, I am satisfied there was a failure to obtain sufficient, appropriate audit evidence regarding the borrowing arrangement between the Fund and a Fund member to establish whether it complied with borrowing exceptions. The evidence contained in Mr Sidhu’s Affidavit and provided at the hearing displays his inadequacies in obtaining sufficient audit evidence to show that the asset was held beneficially by the Fund in trust:
(i)there was no copy or evidence on the audit file about the holding trust arrangement and whether it was consistent with the requirements for a compliant LRBA;
(ii)there was no evidence on the audit file of a registered mortgage over the property;
(iii)there was no evidence on the audit file of the repayment of both principal and interest and whether the repayments were made monthly; and
(iv)the loan agreement document provided to the ATO was reproduced, backdated and re-executed as the original was not returned or was misplaced.
(d)Arm’s length – after considering the evidence and the parties’ submissions, I am satisfied there was a failure to obtain sufficient, appropriate audit evidence to show that the Fund’s properties were maintained on an arm-length basis. Mr Sidhu’s evidence was that the audit file did not contain a copy of the rental agreements or any evidence that the rental was at market rates, although he had communicated with the trustee on these issues that communication was not on file.[39] Further in relation to one of the properties, Mr Sidhu’s evidence was that he did not have a copy of the lease agreement on the audit file but was ‘pretty sure’ he knew who the tenant was.[40] In relation to the other property, there was no evidence on the audit file as to the reasons for the lack of rental being earned from the property for the 2020 income year which was because floods and COVID-19 made it unrentable.[41]
(e)Market valuation – after considering the evidence and the parties’ submissions, I am satisfied there was a failure to obtain sufficient, appropriate audit evidence to support that the Fund’s investment properties were recorded at market value in accordance with regulation 8.02B of the SIS Regulations. Mr Sidhu’s evidence was also that he relied on conversations with the trustee and his property knowledge of the area for changes in the value of the properties and conceded that he could have done more.[42]
(f)Charge over asset of Fund – after considering the evidence and the parties’ submissions, I am satisfied there was a failure to obtain sufficient, appropriate audit evidence about the existence of any charges over the Fund’s assets. Mr Sidhu’s evidence was that he relied on his knowledge of his client’s affairs and, knowing that nothing had changed, he did not do a title search.[43]
Compliance with auditor independence requirements in APES 110
[39] Transcript of hearing at P-69: 45-46; P-70: 1-2.
[40] Ibid at P-70: 7-9.
[41] RSFIC at [112].
[42] Transcript of hearing at P-72: 40-46.
[43] Ibid at P-73: 4-8.
Applicant’s submission
On the issue of independence, the Applicant submits that the Respondent is holding him to a higher standard than the Court held Mr Gilliland to in Australian Securities and Investments Commission v Gilliland [2022] FCA 1421.
The Applicant’s evidence was that the ATO did not require compliance with APES 110 until after 1 July 2021.[44] The Applicant’s evidence was that until that time, APES 110 did not restrict SMSF auditors from auditing clients of their own practice and that all of the audits were completed before 1 July 2021.[45]
[44] Applicant’s closing submissions at [38].
[45] Ibid at [40] and [55].

The evidence that was admitted supporting this position was a range of documents that were produced by the ATO regarding SMSF auditors and auditor independence after 1 July 2021.
The Applicant further takes issue with the accuracy and appropriateness of the Respondent’s assertion made during the hearing that the ATO does not make the rules and requirements given the co-regulatory nature of the regime[46] and its own statement that it is responsible for monitoring compliance with the independence requirements set out in the code.[47]
[46] Ibid at [40].
[47] Ibid at [53].
Respondent’s submission
The Respondent submits that independence threats were created by reason of:
(a)The Applicant’s longstanding association with his audit clients which in respect of the C Fund was a period of 9 years; the R Fund was for a period of 12 years; and for the O Fund, Mr Sidhu noted that it would have been a long time.[48]
(b)The fact that his firm IPS performed an extensive range of non-audit work for these clients that went beyond services of a routine or mechanical nature.[49]
[48] Respondent’s closing submissions at [109] and Exhibit A4.
[49] Ibid.
The Respondent submits that the audit file provided for each of the Funds do not display that the threats to independence were assessed and consideration given to whether safeguards were necessary.[50]
[50] Ibid at [110] and [115].
Further, the Respondent submits that the audit deficiencies in relation to each of the Funds often relate to the Applicant failing to obtain sufficient audit evidence, because in many instances the Applicant relied on representations by the trustees of the in-house accountants.[51]
[51] Ibid at [111].
On the issue of compliance with APES 110 independence requirements prior to 1 July 2021, the Respondent submits that, whilst it is true that in September 2021 the ATO released a statement noting that it expected SMSF auditors to comply with their obligations under APES 110 and not to undertake significant in-house work for audit clients, that did not mean that it was permissible before that date.[52] The Respondent submits that those requirements were mandated before that date.
[52] Respondent’s closing submissions at [116].
In that regard, a previous version of APES 110 Code of Ethics for Professional Accountants issued in December 2010, which came into effect on 1 July 2011, contains similar but not identical provisions dealing with threats to independence including:
(a)Section 290.7 which requires members to identify threats to independence; evaluate those threats and address the threats by eliminating them or reducing them to an acceptable level. It also requires members to decline or terminate the audit engagement if threats cannot be reduced to an acceptable level.
(b)Section 290.150 explains how familiarity and self-interest threats might be created as a result of a member of an audit team having a long association with the audit client.
(c)Sections 290.164 to 290.167 explain how management responsibility of an entity which includes taking responsibility for the preparation of financial statements can create threats. Section 290.165 states if a firm were to assume management responsibilities for an audit client the threats created would be ‘so significant that no safeguards could reduce the threats to an acceptable level’. Section 290.168 states providing an audit client with accounting and bookkeeping services, ‘such as preparing accounting records or Financial Statements, creates a self-review threat when the Firm subsequently audits the Financial Statements’.
As the ATO’s educational materials explain the code underwent a significant restructuring in 2021. The statement from the ATO about its compliance approach contains the following:[53]
The restructured Code which commenced with effect from 1 January 2020 and the Independence Guide (May 2020) make it clear that SMSF auditors who are conducting in-house audits are at risk of not complying with the Code…
Our previous transitional educative approach to compliance with these standards has ended. We expect all firms (and network firms) that have previously conducted in-house audits to have already restructured to meet the independence requirements for all audits from 1 July 2021.
[53] Exhibit A4.
The PowerPoint presentation from a Webinar also explains that, during the 2020-21 income year, the ATO took a transitional approach to compliance by educating and helping auditors meet their obligations.[54]
[54] Exhibit A3,
The Respondent directs the Tribunal to comments made by Deputy President McCabe in Townshend and Australian Securities and Investments Commission (Townshend)[55] that the ‘auditor independence requirements merely articulate what is inherent in the role of an auditor’. I can see how the ATO’s educative material in its attempt to communicate the significance of the revision made to APES 110 and the Independence Guide may have given the false impression that the requirements were something ‘new’. However, I can also see that the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour essentially remained the same.[56] Also remaining essentially the same is the conceptual framework which require auditors to identify threats to compliance with the fundamental principles; evaluate the significance of those threats and apply safeguards to eliminate or reduce those threats to an acceptable level.[57] Regardless of the ATO approach to compliance, Mr Sidhu had a duty imposed on him under the SIS regime to comply with those requirements – something which he failed to do or, if he did do, he failed to document.
[55] [2023] AATA 3810 at [28].
[56] APES 110, 2011 pages 12-13 cf APES 110, 2020 pages 26-30.
[57] APES 110, 2011 page 13 cf APES 110, 2020 page 13.
What is the appropriate exercise of discretion?
It is essentially uncontested that the discretion in section 130F of the SIS Act to disqualify or suspend Mr Sidhu’s registration as an approved SMSF auditor has been enlivened. The Applicant submits that a lifetime disqualification in these circumstances is unfair, disproportionate and inflexible. The Applicant has suggested the imposing of a suspension for a period of 12 months from the date of the hearing with enforceable undertakings as to continuing professional development and random auditing.[58]
[58] Applicant’s closing submissions, pages 31-32.
In Townshend, DP McCabe outlined several factors that are relevant to the exercise of the discretion which I find also applicable to this case:
(a)The applicant’s professional record and personal circumstances;
(b)The seriousness of the conduct and the period over which it occurred;
(c)Evidence of insight into the problem and the extend of cooperation with the regulator;
(d)Specific and general deterrence; and
(e)Any other mitigating factors.
In relation to factor (a), a professional character reference was given by Mr Grant Abbott, Director of LightYear Group Ltd, which stated that Mr Sidhu has a high standard of knowledge and that his approach to his professional responsibilities is both diligent and thorough.[59] The Respondent submits that Mr Abbott’s evidence was of little probative value as, among other things, it does not comment on the competency and audit quality matters raised by ASIC.[60] As has been highlighted above, Mr Sidhu had a propensity for taking a lax and casual approach to audit procedure, documentation and record keeping. He has admitted himself that his practices have been far from perfect. Prior to these audits, his professional record appears to be unblemished. There was no evidence to suggest that cancellation would deprive Mr Sidhu of his livelihood, however, given the magnitude of the action, it is likely that financial and reputational consequences to his business could flow from such action. It appears that even before the taking of regulatory action there had been a decline in the number of SMSF audits conducted by Mr Sidhu with 119 conducted in 2018 financial year down to 29 in the 2021 Financial year.[61]
[59] Exhibit 1 at [4].
[60] Respondent’s closing submissions at [123].
[61] T6-3 page 114.
In relation to factor (b), the failure to carry out or perform adequately and properly the duties of an approved SMSF auditor and the failure to comply with auditor independence requirements in the SIS Act and Regulations are not only combined serious matters but are also serious matters in their own right.
The Applicant contends that the concern about independence is insufficient to justify disqualification. I disagree with this. As previous Tribunal decisions have concluded the failure to act independently or to act in a way that calls auditor independence into question is a very serious matter.[62] As was the case in Townshend, I do not consider Mr Sidhu had a wilful disregard of the independence requirements so I do not consider the conduct to be ‘especially serious’.[63] I think Mr Sidhu had a misapprehension about the scope of the independence requirements to approved SMSF auditors which may have been contributed to by the ATO’s educational materials. However, this does not excuse as stated above his failure to discharge the duty he had at that time to eliminate or reduce risks to independence.
[62] Townshend at [33].
[63] Ibid.
In relation to factor (c), the Respondent submits that over the course of his evidence Mr Sidhu demonstrated a distinct lack of insight into his audit failing and downplayed the significance of a number of critical issues and attempted to excuse his conduct.[64] I do not entirely agree with this characterisation of Mr Sidhu’s evidence. I do not consider that he downplayed the audit deficiencies. Several times he despondently acknowledged error and admitted that he could have done more.[65] I also do not find his evidence to be inconsistent, evasive or lacking credibility. His evidence displayed insight into the problem with his audit procedures. In his request for ASIC to review its decision, he acknowledged his previous approach to documenting his audit work fell well short of what a reasonably competent auditor would have on their file and expressed his determination to dramatically improve his approach.[66] But for the issue of the false declaration, there was no evidence to suggest that he was recalcitrant in his dealings with the regulator. As the Applicant’s closing submission states Mr Sidhu presented as a truthful witness, readily conceded matters against his own interest and did not at any time denigrate the Respondent, the Respondent’s counsel or the Tribunal.[67]
[64] Respondent’s closing submissions at [124].
[65] Transcript of hearing at P-27: 38-47; 20-31.
[66] T7-1 page 140.
[67] Applicant’s closing submissions at [33].
In relation to factor (d), regarding specific deterrence as stated above, Mr Sidhu displayed a degree of insight into his failings. Mr Sidhu gave evidence that he has changed his processes as a result of the ATO’s intervention and no longer uses manual checklists.[68] However, the Respondent submits his continued lack of appreciation of some of the issues suggest that there can be little comfort that he would sufficiently change his ways if after a period of suspension he was to return to auditing SMSFs.[69] Given the nature of the audit errors, I am concerned that these errors could be found in previous audits conducted outside the three examples, despite the evidence provided that the Institute of Chartered Accountants conducted some type of review of the firm’s file.[70] I am also concerned that they could be repeated in audits going forward.
[68] Transcript of hearing at P-78: 8-23.
[69] Respondent’s closing submissions at [126].
[70] Transcript of hearing at P-79: 16-30.
Mr Sidhu also gave evidence that IPS no longer does audits if they are doing any other work for their SMSF clients.[71] Like in the case of Townshend, Ms Sidhu’s problematic conduct in relation to the independence requirements was the product of ignorance over the application of the auditor independence requirements and whatever doubts he had about the requirements in the past have undoubtedly been resolved by his experience with the regulators.[72] I do not consider that a disqualification decision is necessary to deter him from engaging in future conduct in contravention of the requirement. In any event, as pointed out in Townshend, this is academic because Mr Sidhu would not be permitted to undertake the role if that occurred.
[71] Ibid at P-77: 20-24.
[72] Townshend at [38].
In relation to general deterrence, the Respondent directed the Tribunal to the decisions in Islam and Australian Securities and Investments Commission[73] (Islam) and Murphy and Australian Securities and Investments Commission.[74] I have also considered the comments by Senior Member, now Deputy President, Lazanas in Henley and Australian Securities and Investments Commission (Henley)[75] in which she cited the statements made in the Second Reading Speech to the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 (Cth) that SMSF auditors ‘play a vital role in maintaining the integrity of a major sector of the superannuation system’. I have further considered the comments by Deputy President McCabe in Townshend that regulatory action will communicate a clear message to others about the importance of complying with requirements.[76]
[73] [2024] ARTA 88.
[74] [2025] ARTA 75.
[75] [2024] AATA 82.
[76] At [44].
In relation to factor (e), the mitigating circumstances that may make disqualification a disproportionate or otherwise inappropriate response is the remorse he has displayed. In this regard, I consider Mr Sidhu’s expression of contrition was actually felt and that he would in the future attempt to achieve the high standards required of him. During closing submissions, Mr Sidhu’s counsel repeated the offer of a suspension for a period with conditions imposed on Mr Sidhu’s registration. I agree with the Respondent’s submission provided during closing that it is not open to the Tribunal to impose conditions because the Tribunal does not acquire all the powers of ASIC, only those that are necessary to review the decision made by it.[77]
[77] Shi v Migration Agents Registration Authority [2008] HCA 31.
CONCLUSION
As previous Tribunal decisions have acknowledged, a balancing exercise is required when deciding on a regulatory response.[78] Previous Court and Tribunal decisions have also noted that, when considering the appropriateness of regulatory action, one must keep in mind the objects of the SIS Act.[79] I have found it useful to consider whether the failures alone could substantiate a disqualification decision, or whether it is the failures together which do. I note that there have been decisions of the Tribunal that have found disqualification to be the correct or preferable response for a sole failure of an auditor to carry out or perform adequately and properly the duties of an approved SMSF auditor, and for a sole failure to comply with auditor independence requirements in the SIS Act and Regulations. I consider that, given the circumstances in this case, disqualification could be a disproportionate response to the failures on their own. Although I can see some of the considerations and conclusions reached in the Islam as relevant to this case, I have not found Mr Sidhu to be misleading or deceptive in his evidence. Whether the failure to comply with auditor independence requirements on its own justifies disqualification is finely balanced, given Mr Sidhu’s misconception and the ATO’s educational materials stating that, during the time these audits were conducted, it had been taking an educative approach to compliance. However, I find inescapable the conclusion that the cumulative effect of the breaches shows that Mr Sidhu lacks the judgement, competence and diligence required to carry out the vital role of an approved SMSF auditor. Therefore, I find that disqualification is the appropriate response and as such the reviewable decision is affirmed.
[78] Townshend at [43].
[79] Australian Securities and Investments Commission v Gilliland [2022] FCS 1421 at [36].
Exhibit A1 – Affidavit of Grant Abbott dated 08/02/25
Exhibit A3 – ATO, SMSF auditors and Auditor Independence after 1 July 2021, 28 July 2021
Exhibit A4 – ATO, ATO’s role and compliance approach, Last updated 25 November 2022
Exhibit R2 – Three signed declaration documents

Date(s) of hearing: 10 February and 14 May 2025

Counsel for the Applicant: Ian Young

Counsel for the Respondent: Felicity Bentley

Solicitors for the Respondent: Aldo Paciocco, Australian Securities and Investments Commission

Date(s) of hearing:	10 February and 14 May 2025
Counsel for the Applicant:	Ian Young
Counsel for the Respondent:	Felicity Bentley
Solicitors for the Respondent:	Aldo Paciocco, Australian Securities and Investments Commission