KPMG partner Bill Wilkinson is the latest accountant to fall foul of the industry’s self-disciplinary process following the wave of finance company failures.
Mr Wilkinson, who has been an audit and advisory partner for over 20 years, was censured and ordered to pay costs of $9,577 (plus GST) after pleading guilty to two charges brought by the Disciplinary Tribunal of the Institute of Chartered Accountants.
The charges related to breaches of the industry codes of ethics when Mr Wilkinson performed an audit of a company’s financial statements for the six months ended December 31, 2007.
All details relating to the identity of the client were suppressed from publication following a public hearing in Wellington on November 26.
The guilty charges related to poor documentation on the audit file to support conclusions that:
- Company X did not have to disclose analysis of expected maturity dates of both financial liabilities and assets; and
- Provision for credit impairment was adequate, when the audit work papers indicated that a substantially higher provision “was, or might have been, warranted.”
In his decision, tribunal chairman Jim Hoare said Mr Wilkinson agreed to a proposal as to the penalty, costs and publication.
“It was not alleged that there was any substantive error in the audit or failing in the audit procedures or that the audit opinion was inappropriate. The charges solely relate to the lack of sufficient documentation.
“In the absence of any evidence other than the abbreviated facts presented to the tribunal we have no reason to vary the parties’ joint recommendation of censure, full costs and publication with suppression of the identity of the audit client.”
Mr Wilkinson told NBR he couldn’t comment on the case.
His public censure is one of several recent disciplinary rulings against high profile auditors as the industry deals with the fallout from finance company collapses.
Recent cases include Woodnorth Myers partner Byron Pearson for his audit of South Canterbury Finance, Ernst & Young former partner Gordon Fulton for a half-year review of Feltex Carpets’s financial statements and Staples Rodway Hamilton partner Christopher Hughes for his audit opinion on the financial statements of Nathans Finance for the year ended 30 June 2006.
A bill was recently introduced to Parliament that will require the Institute of Chartered Accountants (NZICA) to regulate auditors as a specialist profession, rather than as chartered accountants.
The bill also provides for the proposed Financial Markets Authority to be responsible for auditor oversight in monitoring and reporting on the adequacy and effectiveness of the institute's regulatory systems.