Chartered Accountants Australia and New Zealand (CA ANZ) has long advocated to close the regulatory gaps that allow firm-level decisions affecting audit quality to go unseen and unaccountable. We welcome Treasury's Options Paper as the opportunity to complete that work.

Audit quality also depends on auditors identifying as members of a profession with public-interest obligations. Professional identity, supported by professional accounting bodies such as CA ANZ through education, ethical standards, continuing professional development, discipline and peer expectations, helps reinforce the judgement, courage and speak-up culture needed when auditors face ethical dilemmas or commercial pressure.

CA ANZ recommends the Government adopt a targeted reform package that gives ASIC clear jurisdiction over the firms whose audits matter most to the public interest.

We call on the Government to:

1. License firms where audit quality matters most. Require public interest entities to obtain audit services only from audit firms licensed by ASIC, giving ASIC firm-level jurisdiction over quality management, ethics, independence and governance, not only individual auditors. This is the central reform.
2. Set a governance code for large audit firms. Introduce an enforceable Australian audit firm governance code for the firms most significant to investors and superannuation members, reinforcing audit quality, independence, ethical culture, transparency and accountability for key decision makers.
3. Give ASIC the full regulatory toolkit. Equip ASIC with proportionate civil penalties, timely administrative powers and remediation tools, with due process and fairness preserved, so it can respond effectively to firm-level and auditor conduct.
4. Protect people who speak up. Strengthen whistleblower protections so people in large professional services structures are not excluded because of their legal form, progressed through the Government's separate review of corporate and tax whistleblowing laws.
5. Keep reform targeted and proportionate. Scope firm licensing to audits of disclosing entities and registrable superannuation entities and apply the governance code to large audit firms using clear thresholds such as the existing transparency reporting threshold in the Corporations Act. This closes the key gaps while preserving capacity, competition and choice.

By addressing the key drivers of audit quality, this package avoids the need for more disruptive structural reforms. Measures such as mandating audit-only firms, requiring authorised audit companies, or limiting partnerships would create significant cost and disruption without clear evidence they would improve audit quality.

We welcome the opportunity to continue working with Treasury as these reforms develop.