Chartered Accountants Australia and New Zealand (CA ANZ) welcomes Treasury’s consultation paper on the Regulation of accounting, auditing and consulting firms in Australia (the paper). 

Recent events, and the ensuing public conversation, show that clarifying and strengthening regulatory roles and frameworks is essential. We have responded to important questions arising from this conversation and present eleven recommendations below that constructively address the potential issues raised in the paper.

A clear scope and focus is essential to achieving effective policy outcomes in the public interest. Treasury representatives advised at a roundtable held on 5 June 2024 that the primary focus of this work is audit regulation, and we recognise recent events have raised questions around the governance of audit firms, given their important roles to the capital markets and economy. Accordingly, we have focused most of our response on audit regulation. 

Treasury’s consultation paper shows there is an urgent need for government to clarify the intended roles of government and professional regulation of audit in Australia. It has been twenty years since government adopted the chief role for audit regulation after the passing of the Corporate Law Economic Report Program (Audit Reform and Corporate Disclosure) Act 2004 (CLERP 9) which introduced statutory auditor and financial reporting obligations, effecting a move away from self-regulation. In 2010, Treasury determined that the “auditing profession has undergone a significant cultural transformation from being a largely self-regulated profession to one that is now subject to an independent audit oversight regulator in Australia and in most overseas developed economies”, with professional bodies to play a ‘supplementary’ role.

CA ANZ is concerned that the paper, and surrounding public conversation, is evidence of a reduction in clarity and awareness of the scope of the government’s role and expectations placed on professional bodies. There are also clear gaps in the jurisdiction and resourcing for government regulation of audit firms, and potential over-reliance on non-statutory regulation.