)
Grant Thornton audit partner Simon Christopher Trivett has been admonished by the Companies Auditors Disciplinary Board (CADB) for failing to adequately perform his duties as a review auditor for the FY18 financial statements of former ASX-listed electronic payment processing company iSignthis.
The CADB, the disciplinary tribunal for registered company auditors, handed down its findings a year after the Federal Court found that iSignthis, which is now known as Southern Cross Payments, engaged in a number of contraventions of the law between 2018 and 2020.
In that ruling, following action brought by the Australian Securities and Investments Commission (ASIC), the former CEO of iSignthis, Nickolas John Karantzis, was found to have breached the law by failing to ensure information given to the ASX was not false or misleading. He was also found to have breached his directors’ duties.
The CADB says the decision handed down this week to admonish Trivett is the first in which the board determined the role of review auditors in the conduct of an audit.
In making its decision, the CADB took into account that, in accordance with an undertaking given by Trivett to the Federal Court on 26 October 2023, Trivett agreed not to perform the duties of a registered company auditor between 1 November 2023 to 31 October 2024.
The CADB also ordered that Trivett provide to ASIC various undertakings and that he pay ASIC’s fixed costs of the application, totalling $490,000.
“This is an important decision,” says ASIC deputy chair Sarah Court.
“It is the first time that the CADB has determined the role of review auditors and engagement quality control reviewers in the conduct of an audit.
“Review auditors and engagement quality control reviewers play an important part in reviewing auditor conduct and significant judgments made by audit engagement teams in company audits.”
In response to the CADB’s admonishment of Trivett, Grant Thornton has affirmed its commitment to upholding the standards of the profession.
“As a firm, we insist on the highest standards from our audit teams, and we’re obviously disappointed that these were not met when this audit was conducted in 2018,” says a Grant Thornton spokesperson.
“We take our responsibilities as auditors very seriously and we will always co-operate fully with regulators tasked with upholding the standards of our profession.
“We have taken many learnings from the outcome of this matter, and it has underlined how critical it is for audit firms to rise to the increasing expectations of investors and regulators.”
ASIC originally filed its application regarding Trivett’s conduct with the CADB in February 2021, leading to a four-day hearing in Melbourne in December 2022.
The panel upheld ASIC’s application in September 2023, but the matter was “substantially delayed” after Trivett launched proceedings challenging the validity of the panel’s decision. These proceedings were dismissed on 22 April 2024.
Following this week’s decision, Trivett has been given 28 days to pay the agreed costs of $490,000.
The CADB decision brings to a close ASIC’s investigation into iSignthis, a company that provided identity verification, transactional banking and payment processing services. The company was delisted from the ASX in November 2022 and has since been renamed Southern Cross Payments.
The Federal Court last year found that iSignthis engaged in misleading or deceptive conduct by representing on 3 August 2018 that less than 15 per cent of the company’s total revenue in the fourth quarter to 30 June 2018 was from one-off or set-up fees.
The company also failed to disclose from 3 August 2018 that in the fourth quarter to 30 June 2018 it had recognised about $3 million in one-off and non-recurring revenue and had incurred about $2.85 million in one-off costs.
The court also found that iSignthis failed to disclose from 12 May 2020 that credit card group VISA had terminated its relationship with the company while also failing to disclose the reasons for the termination.
Karantzis, the former CEO of iSignthis, was found to have failed to exercise his powers and discharge his duties with reasonable care.
The court found that he was also involved in the failure of iSignthis to comply with its continuous disclosure obligations regarding the recognition of revenues and costs in 2018.
The court further ruled that Karantzis failed to take reasonable steps to ensure information that he gave to the ASX regarding the termination by VISA was not false or misleading.
)
