- Its terms of reference are very broad, with ‘any related matter’ being considered
- The Parliamentary Joint Committee is seeking submissions by 28 October
- The inquiry is testament to the value auditors provide through ensuring there is reliable financial information in the capital markets
On 1 August 2019, the Senate referred an inquiry into the regulation of auditing in Australia to the Parliamentary Joint Committee on Corporations and Financial Services (PJC) for report by 1 March 2020. We welcome this inquiry into auditing regulation and we believe this is a really important public conversation.
The inquiry's terms of reference are very broad (see below) but consistent with the work and member engagement we have been doing this year around the future of audit and the international debate on audit.
Our overall approach is focused on being an active voice and facilitator in the debate, making a difference on the issues surrounding audit regulation and the future of audit, and advocating for sensible and effective solutions in the public interest.
We have engaged with key stakeholders in Australia and NZ throughout 2019 to develop a vision around the future of audit, including on the key issues being debated. This has included events and stakeholder meetings across the Australian states and in NZ involving CAs in audit firms, commerce and industry, regulators and policy makers, as well as investor, governance, and business groups.
Our research initiatives, which are focused on relevance, confidence and quality, are aimed at driving evidence-based audit policy.
Our recent retail investor confidence survey shows that 87% of retail investors generally trust audited financial reports produced by Australian public companies. More so, auditors came out on top as the most trusted group for these investors. This certainty stems from the reputation risk accompanying any wrongdoing, the belief that auditing is well regulated and that auditors provide honest and independent third-party scrutiny.
Also, we conducted a joint study with ACCA into public expectations of audit. This shows there is strong support for broadening the roles and responsibilities of auditors to provide additional assurance about the new and emerging risks investors and the public face in the information age. The public sees audit as part of the solution to better corporate behaviour.
As well as our own research, we connect with key audit and reporting academics as part of our outreach.
Auditing can be quite a technical area for most people and we want to help everyone be part of the discussion. The committee secretary asked us to provide some simple plain language background information about auditing regulation in Australia with international comparisons to help the committee and others who wish to make submissions. We also outlined overseas developments so the inquiry can draw on up-to-date information, which is critical when things are moving so fast in some countries.
Our focus now moves to a submission on the matters raised in the terms of reference, which is due by end of October. We would very much appreciate hearing members' views and we encourage members to make their own submissions.
Terms of reference
Regulation of auditing in Australia with particular reference to:
- the relationship between auditing and consulting services and potential conflicts of interests
- other potential conflicts of interests
- the level and effectiveness of competition in audit and related consulting services
- audit quality, including valuations of intangible assets
- matters arising from Australian and international reviews of auditing
- changes in the role of audit and the scope of audit products
- the role and effectiveness of audit in detecting and reporting fraud and misconduct
- the effectiveness and appropriateness of legislation, regulation and licensing
- the extent of regulatory relief provided by the Australian Securities and Investments Commission through instruments and waivers
- the adequacy and performance of regulatory, standards, disciplinary and other bodies
- the effectiveness of enforcement by regulators
- any related matter.
About this inquiry
Regulation of auditing in AustraliaRead more