The Australian Securities and Investments Commission (ASIC) announced on Monday, December 22, that it has commenced civil penalty proceedings in the Federal Court against BDO Audit, as well as its director, Dean Just.

According to the Australian regulator’s statement, the suit comes due to alleged statements in audit reports that made them materially false or misleading. Furthermore, the company failed to take reasonable steps to ensure that the audit reports were not materially false or misleading.

The statement went on to explain that BDO Audit was the audit company for the Australian Stock Exchange (ASX)-listed tech company Dubber Corporation Limited. This was the holding company of a group of firms, including Dubber Pty Ltd.

At the time when the alleged incident took place, Dean Just served as the lead auditor, which is why he was included in the lawsuit.

ASIC Alleges That BDO Failed To Adequately Conduct Audits

ASIC now claims that BDO Audit and Mr. Just failed to take the reasonable steps to ensure that the audit reports lodged with ASIC for the financial years ending June 30, 2020 to June 30, 2022 were not materially false or misleading because of statements made in each of the reports.

The auditor was obligated to provide statements that, in BDO’s opinion, gave a true and fair view of Dubber Group’s financial position. BDO also had to conduct the audit in accordance with the Australian Auditing Standards, and it had to believe that the audit evidence obtained was sufficient and appropriate to provide a basis for that opinion.

With that being the case, ASIC alleges that Dubber’s financial reports for each of the relevant financial years were materially misstated, and the audits had not been conducted in accordance with the Australian Auditing Standards.

In fact, earlier this year, in June, Dubber also filed a lawsuit against BDO for negligence over missing funds, alleging that the company’s negligence contributed to $30 million in company funds being misappropriated by its former chief executive and an associate.

ASIC’s press release also cited the regulator’s Deputy Chair, Sarah Court, who said “We consider BDO Audit and Mr Just acted outside of the auditing standards, and we allege misleading reports were submitted to ASIC.”

Court added that auditor misconduct continues to be a key enforcement priority for ASIC. “Confidence and trust are fundamental to the role of company auditors, and critical to maintaining the integrity of our markets and enabling investors to make informed decisions,” she explained.