Auditors and Legal Liability

AUDITORS AND LEGAL
LIABILITY

INTRODUCTION
 Ryan Wealth Holdings Pty Ltd vs
Baumgartner
 audit of a Self Managed Superannuation Fund
(SMSF) where the auditor is found liable for the
losses (Tax Talks, 2017)
 audit of the SMSF was undertaken for the years
2007 to 2009

FACTS OF THE CASE
Ryan Holdings Retirement Fund
 trustees made investments in the form of Loans
to entities in which adviser has personal interest
 auditor was not provided with sufficient
appropriate evidence
 investments were classified under the head
‘Mortgage Loans’ which was not a mortgage
loan.
 quantified the damages $2,260,140

ROOT CAUSES AND PERTINENT ISSUES OF
THE CASE
 the auditor failed to exercise reasonable care and
diligence
 that the investments reported were at the lower
of cost or market value.
 Professional judgment not exercised in assessing
the reasonableness of the figures of Investments