Full Federal Court dismisses appeal by former auditor Reginald Lance Williams

Key dates

2012-06-30

End of the financial year for the LM Managed Performance Fund audit giving rise to the disciplinary proceedings.

2018-12-05

The CADB cancelled Mr Williams’ registration as a company auditor and ordered him to pay ASIC’s costs fixed at $200,000.

2025-06-18

Justice Perry dismissed Mr Williams’ Federal Court application for judicial review of the CADB decision.

2026-10-09

The Full Federal Court dismissed Mr Williams’ appeal, upheld the primary judgment and ordered him to pay the costs of the appeal.

Suggested considerations

• Audit firms should consider reviewing engagement-partner accountability arrangements to ensure that supervision, review and final audit conclusions are documented and cannot be characterized as delegated away.
• Registered auditors should consider testing whether audit files demonstrate adequate work on matters highlighted in the underlying proceedings, including loan and receivable valuation, impairment and recoverability, going concern, related-party loans, management fees, materiality and the basis for the audit opinion.
• Compliance and quality-management teams may wish to assess whether engagement quality reviews and consultations sufficiently challenge significant judgments and unresolved audit deficiencies before the report is signed.
• Firms should consider confirming that use of specialists, junior staff, component auditors or other team members is supported by appropriate direction, supervision, review and documented auditor responsibility.
• Australian audit practices may wish to monitor CADB and Federal Court decisions for further interpretation of the requirement under section 1292 of the Corporations Act 2001 that auditor duties be performed adequately and properly.
• Companies and fund managers may wish to consider whether their auditor oversight processes identify recurring deficiencies in valuation, related-party disclosures, fee recognition, going-concern assessments and audit materiality.

What changed

No new statutory obligation or compliance deadline was introduced. The judgment leaves in place the CADB’s cancellation of Mr Williams’ registration and the earlier findings that his audit of the LM Managed Performance Fund for the year ended 30 June 2012 was not performed adequately and properly. The Full Court confirmed that no legal or jurisdictional error had been established in the CADB’s decision-making and upheld the primary judge’s recognition of the CADB’s specialist expertise, subject to procedural fairness. Independent accounting commentary on the earlier judgment has treated the outcome as a practical reminder that engagement leaders retain responsibility for the work performed under their supervision, rather than being able to transfer accountability to audit staff or speciali

Who is affected

• Registered company auditors in Australia
• Registered audit firms and authorised audit companies
• Audit engagement partners and other personnel with supervisory responsibilities
• Companies and managed investment schemes relying on audited financial reports

Related regulations

• Corporations Act 2001, section 1292
• Corporations Act 2001 provisions governing registered company auditor registration and discipline
• Applicable Australian Auditing Standards, including requirements concerning audit evidence, risk assessment, supervision and review