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The firm has been barred from the service pending a review of its conflict of interest management and documentation policies.
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PKF Melbourne banned from expert reports after ASIC probe
24 June 2024
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PKF Melbourne has been banned from providing independent expert reports (IER) pending a review of its policies and procedures after an ASIC investigation uncovered compliance failings in past engagements.
In a court-enforceable undertaking between PKF and ASIC released last week, PKF admitted it failed to uphold documentation and conflict of interest requirements for three past IER engagements, breaching its statutory obligations as an AFS licensee.
ASIC deputy chair Sarah Court said the finding reinforced the importance of firms engaging independent experts to regularly review internal policies and procedures to ensure they were sufficiently documented and applied.
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“Independent experts play a gatekeeper role in corporate transactions, and their reports are relied on by investors to make economic decisions,” she said.
“Robust policies and procedures mitigate the chances of reports containing misleading opinions and allow experts to demonstrate compliance with their statutory obligations.”
Companies undergoing mergers, takeovers or other corporate transactions often commission IERS for objective advice to shareholders.
They are one of the few services offered by accounting and consulting firms that fall under ASIC’s remit along with some auditing and insolvency services.
Among the issues ASIC identified in its probe of PKF between June 2023 to March 2024 was the absence of internal policies on valuation methodology selection and application, as well as a lack of documented assessments regarding the competence of technical specialists and reviews of their reports.
Also missing was documentation for budget considerations (fees, hours, staffing) and regulatory changes, ASIC said.
PKF also lacked robust processes for managing conflicts of interest “to ensure the absence of any conflicts prior to and during IER engagements”, ASIC said.
“PKF did not have documented evidence on file of robust processes, checklists and documents supporting the application of sound conflict of interest and risk management procedures prior to and during the three IER engagements.”
"PKF in some instances failed to take steps to ensure the absence of conflicts of interest prior to and during the three IER engagements.”
As a result, PKF admitted to breaching the Corporations Act 2001 by not ensuring efficient, honest and fair financial services and adequate conflict of interest management.
As part of the court-enforceable undertaking, PKF agreed to cease providing IERs until an independent expert completed a review of its internal policies and procedures for IER engagements and PKF implemented all resulting recommendations.
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