The Office of the Auditor General (OAG) is warning that the use of auditors and other financial professionals to investigate financial crime and fraud is increasing.
The Australian Securities and Investments Commission (ASIC) has published a report which details how fraudsters and other criminals use auditing to steal and exploit financial assets and information.
The report comes after a similar report in the US which highlighted the importance of auditing as a way to detect fraud and the dangers of money laundering.
The OAG said the increasing use of financial auditors has put the trust in them at risk and that it is critical they are trusted with the responsibility of protecting Australians’ financial assets.
“We have seen an increase in the number of audited financial assets, which means that the risks associated with auditing have increased,” OAG chairperson Dr Mark Pardew said.
“This increased risk to our financial system has resulted in a rise in fraudsters using auditing for their own benefit.”
Dr Pardeman said auditors were often used as “asset escrow agents” who were tasked with auditorship of a financial asset.
“As a result, financial auditing has become a form of fraudster-for-hire, in which a thief may steal valuable assets and financial information of a client or victim, or potentially manipulate financial information to benefit himself or others,” Dr Pardemen said.
The threat of fraudsters taking advantage of financial fraud to steal financial assets from their victims is increasing, Dr Pardseman said.
She said there were currently no laws in place to protect financial audited assets, or to enforce those laws, or make sure auditors are properly trained and licensed.
“Auditing has been a form and model of financial crime, but we now need to have a framework to protect our financial systems and ensure that financial audites are fully licensed and properly trained to protect Australian financial systems,” Dr Tanya Stavroulopoulos, the director of the Financial Services Centre of Excellence at the OAG, said.
Financial auditors will now be required to report their findings to ASIC and the Ombudsman.
“There are clear risks for financial auditrs and auditors as a result of the increased use of these services, including fraud and cyber-attacks, and we want to make sure we do everything we can to ensure financial auditers and their employees are fully protected from fraud,” Dr Stavrulopoulos said.