ASIC has launched Federal Court proceedings against Auditeo Australia Pty Ltd and two auditors over alleged serious audit failures linked to the First Guardian Master Fund.
ASIC alleges that unqualified audit reports on First Guardian and its compliance plan for the 2020 to 2024 financial years, issued by Auditeo and signed by either lead auditor Ajm Didarul Islam Khan or, for certain compliance plan audits, Brian Robert Taylor, were false or misleading, contravening s1308(5) of the Corporations Act 2001 (Cth).
ASIC Chair Sarah Court said, ‘We allege audit opinions were issued despite there being no reasonable basis for those opinions and despite significant audit work required under auditing standards not being performed. The alleged failures in this matter occurred before the collapse of the First Guardian Master Fund, with a devastating impact on investors.’
‘Just six months after Auditeo issued unqualified audit reports in relation to First Guardian, liquidators were appointed. More than 6,000 Australians were exposed to its collapse, with liquidators warning losses could be as high as $446 million.'
This action is part of ASIC’s 2026 enforcement priority of seeking accountability for the collapse of First Guardian and related funds.
Mr Khan is the sole director and shareholder of Auditeo and was the lead auditor for the First Guardian financial audits. Mr Taylor was engaged by Auditeo as the lead auditor in relation to most of the First Guardian compliance plan audits.
ASIC alleges that each of Auditeo, Mr Khan and Mr Taylor failed to comply with auditing and assurance standards that applied to the conduct of the audits, did not obtain sufficient and appropriate audit evidence and did not perform the First Guardian audits with due care and skill. Specific failures alleged by ASIC include that:
- Auditeo’s audit files do not demonstrate that any financial audit was in fact conducted for the 2021 financial year, despite Auditeo and Mr Khan issuing a report for that year;
- in the 2022 financial year, approximately $137 million of reported assets were entirely untested by Auditeo and Mr Khan, and in 2023 the untested amount increased to approximately $170 million; and
- Auditeo and Mr Taylor failed to consider the correct compliance plan that applied for part of the 2022 financial year and the entire 2023 financial year.
'Auditors play a critical gatekeeper role in maintaining trust in our markets and helping ensure investors receive an accurate picture of a scheme’s financial position. When that role is not properly performed, the consequences can be severe,’ the Chair said.
‘Compliance plans also play a fundamental role in the regulatory framework to protect retail investors. Auditors providing reliable assurance that responsible entities are adhering to compliance plans is a fundamental aspect of that framework. Auditor misconduct remains an ASIC enforcement priority.'
ASIC is seeking declarations of contravention, financial penalties, injunctions and other orders from the Court.
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Background
Auditor misconduct and holding those responsible for the collapse of the Shield and First Guardian Master Funds to account are key enforcement priorities for ASIC in 2026.
ASIC is seeking civil penalties against Auditeo, Mr Khan and Mr Taylor for alleged contraventions of s 1308(5) of the Corporations Act through making or authorising statements in audit reports submitted to ASIC, which rendered those reports materially false or misleading. ASIC is also seeking orders restraining the defendants from conducting certain audit activities.
In June 2025, ASIC published media releases in relation to the importance of compliance plans and auditors: see 25-090MR and Review of managed fund compliance plans: ‘Failing to plan is planning to fail’.
Consumer information
ASIC has issued a consumer alert warning amid increasing concerns that people are being enticed to invest their retirement savings into complex and risky schemes: 25-120MR Consumer alert – ASIC warns about pushy sales tactics urging people to make quick superannuation switches. Be super smart, visit ASIC’s Moneysmart campaign page.
Stay Updated: ASIC will post important updates about the First Guardian Master Fund on its dedicated webpage: First Guardian Master Fund.