Australian Securities & Investments Commission accepts three court-enforceable undertakings over Hall Chadwick NSW auditor rotation breaches

The Australian Securities & Investments Commission has accepted three court-enforceable undertakings after finding multiple breaches of listed-company lead auditor rotation requirements by registered company auditors connected with Hall Chadwick (NSW). Drew Townsend and former partners Sandeep Kumar and Graham Webb admitted that, between 2019 and 2023, they acted as lead auditor a combined 14 times across eight listed companies when they were not eligible to do so. Lead auditors may serve a listed company for five years, with a potential extension of up to two years where eligibility requirements are met, but these conditions were not met on the occasions identified. ASIC considered Hall Chadwick (NSW)’s system of quality management deficient, and the current registered company auditor members admitted they failed to adequately design, implement and operate a quality management system to ensure compliance with relevant requirements, including independence, consistent with Auditing Standard ASQM 1. Under the undertakings, the current auditor members will engage an independent expert to review the firm’s quality management system against independence and conflict-of-interest obligations and test the implementation of recommendations and remedial actions, while each auditor must inform ASIC and provide evidence of compliance when seeking to extend beyond the five-year term for a period. ASIC also flagged that a report on the collective results of its proactive auditor independence surveillance will be released shortly, and noted that non-compliance with undertakings may be enforced through the courts.