The Australian Securities and Investments Commission (ASIC) has filed Federal Court proceedings against Auditeo Australia and two of its auditors over alleged audit shortcomings relating to the First Guardian Master Fund.
The regulator alleges that unqualified audit reports for First Guardian, a managed investment scheme, and its compliance plan for the 2020–24 financial years were “false or misleading”, in breach of s1308(5) of the Corporations Act 2001 (Cth).
Those audit opinions were issued by Auditeo and signed either by lead auditor Ajm Didarul Islam Khan or, for certain compliance plan audits, by auditor Brian Robert Taylor.
ASIC chair Sarah Court said: “We allege audit opinions were issued despite there being no reasonable basis for those opinions and despite significant audit work required under auditing standards not being performed.
“The alleged failures in this matter occurred before the collapse of the First Guardian Master Fund, with a devastating impact on investors.
“Just six months after Auditeo issued unqualified audit reports in relation to First Guardian, liquidators were appointed.
“More than 6,000 Australians were exposed to its collapse, with liquidators warning losses could be as high as A$446m ($312m).”
ASIC said the case sits within its 2026 enforcement priority of pursuing accountability for the collapse of First Guardian and related funds.
Khan was described by ASIC as the sole director and shareholder of Auditeo and the lead auditor for First Guardian’s financial audits.
Taylor was engaged by Auditeo as lead auditor on most of the First Guardian compliance plan audits.
ASIC alleged Auditeo, Khan and Taylor breached auditing standards.
The regulator claimed they lacked proper evidence and failed to audit First Guardian with “due care and skill”.
It also alleged that Auditeo and Khan issued a 2021 audit report despite having no evidence that a financial audit actually took place.
For the 2022 financial year, ASIC alleged around A$137m in reported assets were not tested at all by Auditeo and Khan.
The value of untested assets rose to approximately A$170m in 2023. The regulator has sought declarations of contravention, financial penalties, injunctions and other orders from the court.
“Auditeo sued by ASIC over alleged First Guardian audit failures” was originally created and published by International Accounting Bulletin, a GlobalData owned brand.
