FMA Cancels Licence of Sydney-Based Auditor
Auckland, January 2025
The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – has taken decisive action to maintain the integrity of New Zealand’s financial markets by cancelling the licence of Sydney-based auditor, Mr Sam Danieli. This decision stems from significant breaches of auditing standards related to the audit of Alliant Perpetual’s financial statements for the year ended 31 January 2022.
Recognised under the Trans-Tasman Mutual Recognition Act 1997 (TTMRA), Mr Danieli was licensed by the FMA under the Auditor Regulation Act 2011. However, critical deficiencies in his audit work prompted the FMA to cancel his licence and prohibit him from reapplying for three years.
Key Findings from the Investigation
The FMA’s investigation revealed multiple failings in Mr Danieli’s audit of Alliant Perpetual, a former FMC reporting entity. The following were highlighted:
- Insufficient Evidence: Failure to obtain adequate support for Alliant Perpetual’s investments’ existence and valuation.
- Lack of Thorough Evaluation: Inadequate review of management’s assessment of Alliant Perpetual as a going concern.
- Professional Scepticism: Mr Danieli did not exercise the necessary professional scepticism, particularly regarding the valuation of investments.
- Audit Quality Control: The audit was completed before an objective evaluation by the Engagement Quality Control Reviewer.
- External Confirmation: Failure to obtain external confirmation when assessing Cash at Bank.
- Material Misstatements: Inability to ensure financial statements were free from material misstatements.
The FMA also found that Mr Danieli did not comply with his licence conditions, failing to notify the FMA of other audit engagements and not providing details of a separate review of his work by the Australian Securities and Investments Commission (ASIC).
Statement from the FMA
Jacco Moison, FMA Head of Auditing, Financial Reporting, and Climate Related Disclosures, commented:
“Mr Danieli’s conduct fell materially short of the reasonable care, diligence, and skill expected, resulting in serious breaches of auditing and assurance standards. These systemic breaches illustrate a poor compliance history on his part. Maintaining high-quality auditing practices is essential to protect investors and maintain confidence in capital markets.”
Mr Moison further emphasized the importance of cooperation between regulatory bodies: “We are grateful to ASIC for its assistance. Collaboration under the Memorandum of Understanding is crucial for ensuring the effectiveness of auditing standards in both Australia and New Zealand.”
Alliant Perpetual was a registered building society that was struck off the register in September 2023.
For more information, please contact the FMA at [email protected].
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