Administrative Review Tribunal affirms Australian Securities & Investments Commission disqualification of SMSF auditor MD Nazrul Islam for auditing standards failures

The Administrative Review Tribunal (ART) has upheld the Australian Securities & Investments Commission (ASIC) decision to disqualify MD Nazrul Islam from being an approved self-managed superannuation fund (SMSF) auditor, after finding he failed to comply with relevant auditing standards on three audit files. The decision affirms ASIC’s February 2024 disqualification order, which Mr Islam sought to have reviewed in April 2024. In its reasons, the ART stressed the importance of SMSF system integrity and the critical role of approved SMSF auditors and their oversight by ASIC and the Australian Taxation Office (ATO). It signalled that auditors should not withhold material from regulators or mislead them, rely solely on trustee representation letters as audit evidence, fail to keep file notes of important discussions, omit documentation of audit reasoning, ignore inconsistencies between documents, or maintain audit files that an experienced auditor could not follow. The ART also noted that SMSF audits are not a “rubber stamp” exercise and that inadequate work can increase the risk of regulatory scrutiny of both auditors and the SMSFs they audit, with potential penalties for SMSFs. Approved SMSF auditors are registered under the Superannuation Industry (Supervision) Act 1993 (SIS Act), and ASIC can disqualify an auditor under section 130F where duties are not performed adequately and properly or the person is not fit and proper. ASIC noted that trustees and members can check an auditor’s registration status, including disqualifications, via ASIC’s SMSF auditor register.