Earlier today, ASIC released the Accounting for Your Super Superfund financial reporting and audit 25/26 report 841 in relation to the performance of some of Australia’s largest audit companies in providing audit services in relation to registrable superannuation entities, and some of the findings in relation to this report were deeply disturbing, deeply disturbing, and I do commend an article which was written by Lucas Baird, reporter of the Australian Financial Review, which is entitled “Ernst Young PwC
Ticked Off 80 billion in private assets without enough proof.
Australia has, or Australians have, 4.8 trillion dollars of funds in superannuation-an extraordinary amount of money. A
lot of that money is invested in unlisted assets, where there isn’t transparency because it’s not listed on, say, the ASX with respect to the value of those assets, it makes it absolutely crucial that the audit processes which are applied to assess valuations are rigorous
and provide transparency with respect to the value of the holdings of Australians’ retirement funds.
So this report by ASIC is deeply disturbing, and let me list some of the summary of audit surveillance findings which are contained in this report. I quote: This is from page 13. Auditors’ procedures often did not sufficiently address the valuation risks associated with unlisted investments and were not adequate to obtain sufficient, appropriate audit evidence.
This is extraordinary. We’re talking about PwC
and EY, two of Australia’s largest audit companies, and they’re failing, failing to discharge their obligations, failing to conduct audits in accordance with audit practice 101, this is what they found. Table three, for externally managed investments, three auditors did not adequately test the reliability of prices provided by external fund managers or test the methods, assumptions, and data used for the valuations. Extraordinary.
For internally managed investments, two auditors did not obtain sufficient appropriate audit evidence for the valuations. This is basic stuff.
One auditor had insufficient audit documentation of the explanations and supporting evidence for valuation differences, and then it goes on.
It goes on.
Of the six
of the six registrable superannuation entity audit surveillances they conducted,
we had findings, and this is on page 14. We had findings relating to the audit of unlisted investment valuations for three, two from EY and one from PwC. The
findings relate to $80 billion of unlisted investments, $80 billion, which is 29% of the $275 billion of investments covered by our six RSE audit surveillances. So they did
ASIC conducted inquiry in relation to valuations for 275 billion dollars of investments and found issues with respect to 80 billion.
80 billion out of 275 billion. What else is out there? There’s 4.8 trillion under management. 4.8 trillion of your superannuation funds under management. On this on this
analysis, we’re talking about at least more than 25% 29%
of what they engaged in
reviews of. 29%
failed to undertake appropriate audit practices, that’s not good enough. That’s not good enough, and I think EY and PwC
should be explaining themselves to the Australian people with respect to what’s gone on here. And I can tell you, as a member of the Joint Standing Committee on Corporations, Law and Financial Services, under the outstanding leadership of Senator Deborah O’Neill. This is certainly a matter which I’m sure we will be considering, how to
bring this issue to light to the public and hold those accountable for these absolute values in terms of auditing unlisted financial
products, assets which are contained in Australian super.
Deputy President, in the United States, they introduced the Volksstead Act
in 1920. The Volksstead Act was the act which introduced prohibition in the United States, prohibiting the sale of alcohol, etc. In 1920, it led to an explosion in organized crime. Al Capone and others made millions and millions and millions of dollars out of it. It wasn’t until 1933,
1933, that the prohibition was reversed. The Volksstead Act was repealed. 13 years it took. 13 years, and during that time, organized crime in the United States exploded. We have a similar phenomenon occurring in Australia with respect to the illegal tobacco industry. In one of the greatest public policy failures any government any government has
achieved, if I can use that word, billions of dollars, billions of dollars has been directed, in effect, from the public purse in terms of excise duties on tobacco to organized crime. And everywhere you go in Australia, there’s a proliferation of illegal tobacconists selling illegal tobacco, such that it’s been reported that as high,
the profits being generated by organized crime has been reported as being somewhere between 4.1 billion and 6.9 billion dollars. That’s money that should be received by taxpayers of Australia, and instead is going to organized crime. But this is also hurting small businesses in my home state of Queensland, and I refer to an article
by
Andreas Nicola. Businesses neighboring tobacco stores face fivefold insurance hikes after firebombing wave. So this isn’t just hurting the Australian government in terms of excise receipts; it’s also hurting the small businesses that are located near illegal tobacconists, and I want to quote to you from
one of those small businesses that’s been impacted,
and
simply by being in a neighboring business, simply by being in a neighboring business.
SD. Dirksen, who runs a South African grocery business in Brown’s Plains, has been hit three times because she had a tobacco shop next to her firebomb. So this is someone running a small business. The tobacco shop, illegal tobacconist next door, gets firebombed, and they’re impacted.
The first time they lost 30 to 40% of business for months because it took three months to get a custom door, and a lot of people thought they were closed. The second time they were forced to close for a couple of months, and I quote emotionally, my husband and myself went through a period of stress and financial stress. It had a massive impact on us. She said we had to take money out of our home mortgage just to fund ourselves and just to keep going, she said. “They tried to leave, but 13 out of 15 places they looked at were still next to an illegal tobacconist or a tobacconist. 13 out of 15.
Insurance is going up through the roof, even if you can get insurance.
And this is all as all of all of this is a result of the government’s failure to properly manage illegal tobacco and have a realistic excise policy. So I commend Angus Taylor and the coalition leadership for the coalition’s plan to drop excise
by 80% to make sure that Australians are redirected from buying illegal tobacco products, funneling billions of dollars of profit to illegal crime, to obtain a legal product, a regulated product, so that these devastating consequences on small businesses can be avoided. We shouldn’t wait the 13 years the United States waited to repeal prohibition back in the 1930s.
Lastly, Deputy President, in 2032, the Olympics and Paralympics will come to Queensland. I won’t be presenting medals; I’m pretty sure of that. But I did have the opportunity to present medals at Ipswich Little Athletics last Saturday, and it was an absolute joy. And I want to congratulate the organizers, including center manager Joshua Roney of Little Athletics Ipswich. And I want to give a call out to one participant, an inspiring participant, Jet Schroeder,
is a 12-year-old. He has cerebral palsy. He’s also a para athlete, and he’s in the F-37 class. And he engaged in the national championships for discus and shot put. He aspires to represent Australia at the Paralympics. So I say, well done, Jed. You’re absolutely an inspiration. Wonderful to meet you. And if you do represent Australia, I hope you do. I’m going to be there to watch you perform.
