Three KPMG Australia audit partners have
been banned from practicing as registered auditors for between nine
months and two years following an investigation into their
involvement in the audits of Westpoint Group companies.

Property company Westpoint Group collapsed in
2006 with losses of more than A$300 million ($247 million).

KPMG is being sued for A$200 million by the
Australian Securities and Investment Commission (ASIC) for alleged
negligent conduct in its audit of several Westpoint companies for
the years ended 30 June 2002, 2003 and 2004.

When the action was launched in October last
year, the Big Four firm said it did not believe the conduct of its
audits caused or contributed to the collapse of the Westpoint group
or losses suffered by investors.

Now ASIC has ruled that partners from KPMG’s
Perth office – Brett Charles Fullarton, Robert Charles Kelly and
Jonathan Grant Robinson – must not practice for two years, 18
months and nine months respectively.

The partners must undertake 10 hours of
additional continuing professional education on audit-related
matters during these periods and have their next three audits
reviewed by KPMG’s partner-in-charge of professional practice
(audit).

They must also pay ASIC’s investigation and
legal costs.

Fullarton signed unqualified audit opinions on
various entities within the Westpoint Group for the financial years
ended 30 June 2002, 2003 and 2004.

ASIC determined these audits were inadequate
and did not comply with Australian Standards on Auditing (ASA).

Concerns included failure to obtain sufficient
audit evidence on which the going concern assumption was based.

ASIC said Fullarton also failed to qualify an
audit opinion on the basis of inappropriate use of financial
reporting and presentation standards.

Kelly signed unqualified audit opinions on
various entities within the Westpoint Group for the year ended 30
June 2004.

ASIC said these audits were also inadequate
and failed to comply with ASA.

Concerns included failure to obtain sufficient
audit evidence in connection with cash flow forecasts and failure
to obtain sufficient evidence related to costs-to-date and
estimated cost-to-complete.

Westpoint engaged Robinson to audit the
compliance plans of three managed investment schemes for the
financial year ended 30 June 2004. He issued unqualified audit
opinions for each.

ASIC’s primary concerns were that Robinson
failed to comply with Australian Auditing Standards and should have
identified material breaches in the compliance plans.