AFM wins court case on all aspects against FSV Auditors, auditor barred from profession

Unqualified auditors report on the 2018 financial statements misled the public

The auditor issued an unqualified audit report despite obtaining insufficient and inappropriate audit evidence. The audit file was virtually empty, despite the existence of multiple red flags indicating risks in relation to fraud, integrity and business continuity. The Disciplinary Court for Auditors concluded that by issuing an unqualified auditors report on the financial statements 2018, the auditor conveyed a misleading message to the public.
 

A complete lack of professional scepticism

Insufficient audit evidence was obtained about the existence and valuation of the €1.3 billion investment in financial fixed assets. According to the Disciplinary Court for Auditors, the auditor more or less indiscriminately adopted the valuations provided by management, despite them being complex and based on estimates, which made them susceptible to manipulation by management. There were also various significant transactions (mostly with related parties) for which vague descriptions were provided and for which no audit in was undertaking regarding their business rationale. 

In addition, the auditor did not obtain any audit evidence concerning the valuation of a significant subsidiary before signing the audit report. The Disciplinary Court for Auditors considers it ‘incomprehensible’ and a ‘mortal sin’ that the auditor concerned nonetheless signed the unqualified auditors report. The Disciplinary Court for Auditors commented that in this particular case the public expects that the auditor applies a high degree of professional scepticism, but that this was completely lacking.
 

Disciplinary complaint by AFM upheld in all aspects. Court sanction: removal from auditors register, re-registration possible after two years

The disciplinary complaint was upheld on all aspects by the Disciplinary Court for Auditors. The auditor has been barred from practising his profession. He may seek re-registration after two years. The auditor can appeal against the decision. 

Objective of disciplinary proceedings is to contribute to confidence in audit profession and promote learning ability

Disciplinary law is designed to maintain the quality of the practice of the audit profession and, to promote and monitor group standards by issuing a public message. Learnings can also be drawn from the decision. The objective of disciplinary proceedings is to contribute to public confidence in that profession.