Whittle and Australian Securities and Investments Commission

This matter concerned an application by Ms Whittle for review of a decision by the Australian Securities and Investments Commission (ASIC) to disqualify her from being an approved Self-Managed Superannuation Fund (SMSF) auditor. Ms Whittle had been an SMSF auditor since 1999 and was registered under the Superannuation Industry (Supervision) Act 1993 (SIS Act) in 2013. The disqualification arose from her auditing of SMSFs of which her brother and de facto partner were the sole members for several financial years, which ASIC determined breached auditor independence requirements under APES 110, and consequently section 128F(d) of the SIS Act.

The primary legal issue before the Tribunal was whether the decision to disqualify Ms Whittle was the correct or preferable decision. This required the Tribunal to consider whether Ms Whittle had indeed breached the auditor independence obligations as prescribed by APES 110, and if so, whether disqualification was the appropriate consequence, or if another decision should have been made by ASIC. The Tribunal was tasked with determining the matter afresh, considering all the evidence.

The Tribunal found that Ms Whittle's conduct in breaching her auditor independence obligations was sustained over a period of nine years, and she acknowledged awareness of these requirements. While Ms Whittle maintained she was independent in mind, she conceded she had breached the "independence in appearance" requirement. She attributed this to inadequate attention to the second limb of the independence definition. Despite using an "Audit strategy and plan" document that identified the potential for independence issues, including a specific question about whether the trustee was related to the auditor, Ms Whittle ticked "Yes" for both the brother's and partner's funds, providing comments that suggested she recognised the relationship but believed her independence was not compromised. The Tribunal noted that the breach of independence obligations, specifically paragraphs 290.104 and 290.105 of APES 110, constituted a breach of section 128F(d) of the SIS Act.

The Tribunal affirmed ASIC's decision to disqualify Ms Whittle. The sustained nature of the breaches over nine years, coupled with Ms Whittle's acknowledgement of the independence requirements and her concession of breaching the appearance of independence, led the Tribunal to conclude that disqualification was the appropriate and preferable decision.