Federal Court dismisses auditor’s application to overturn registration cancellation
A Queensland-based auditor’s application to overturn the cancellation of his registration has been dismissed by the Federal Court.
In 2018, the Companies Auditors Disciplinary Board (CADB) cancelled the registration of auditor Reginald Lance Williams.
Williams was a company auditor first registered in 1996. He was found to have signed an unqualified audit opinion in 2012 for LM Managed Performance Fund, leading to the revocation of his registered status.
In 2018, the CADB successfully contended that:
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Sub-contentions (a)-(c) and (e)-(k) in respect of the carrying value, impairment and recoverability of loans and receivables (sub-contention (d) was found in part).
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Issues regarding consideration of going concern.
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Issues regarding the accuracy and disclosure of related party loans.
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Sub-contentions (b) – (i) regarding the completeness and accuracy of, and the manager's rights and obligations to, management fees.
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Sub-contentions (a), (c) – (e) regarding the calculation of materiality.
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Issues when forming his opinion on the 2012 LM Financial statements.
In other words, the board found that Williams had failed to appropriately assess how the company had disclosed related party loans and recorded the carrying value, impairment and recoverability of loans and receivables. It also found he did not properly consider and document going concern issues.
Additionally, the court identified issues in Williams’ calculation of materiality and his formulation of an overall opinion on the 2012 LM financial statements.
Following the decision, Williams contended that the CADB had erred in law in treating him as “fully vicariously responsible for work done by others in the audit team, and to discipline him on that basis, without any consideration of the proper scope of his supervisory responsibilities, or whether he had complied with them.”
He argued that he had shared responsibility with his colleague, who allegedly had the role of ‘lead engagement partner.’
The court found that the term ‘lead engagement partner’ had never been used in relation to Williams’ colleague, and that he had been responsible for the audit work undertaken as an ‘engagement partner’ himself.
On 18 June 2025, the Federal Court found that Williams had not established any error of law or jurisdictional error in CADB in its decision to cancel his registration. He was ordered to pay ASIC’s costs of the proceedings, and his registered auditor status was not restored.
“Mr Williams’ evidence in cross-examination nonetheless continued to reflect a failure to properly understand the scope of his responsibilities as the Engagement Partner under the Auditing Standards,” court documents read.
“It cannot be irrelevant for the Board to take into account Mr Williams’ continued failure to appreciate the nature of his responsibilities in deciding whether to cancel his registration as an auditor.”
