Date posted: 21/06/2021

The push to cut financial red tape

Red tape issue is back on the Australian Government’s agenda and CA ANZ is seeking a way to achieve a simpler national legislative financial reporting and auditing framework.

In Brief

  • Recent reports show that the scale of the red tape problem is still considerable and growing
  • A fit-for-purpose national reporting framework is needed
  • Three accounting bodies press for change

In my many interactions with members, a constant theme is the regulatory burden they face complying with the myriad of complex, inconsistent and often unnecessary or inappropriate federal, state and territory based financial reporting and audit regulations.

The good news is that the red tape issue is back on the Federal Government’s agenda, with Simon Grant, CA ANZ’s Head of Advocacy and Professional Standing, having recently been involved in discussions with the Department of Prime Minister and Cabinet’s Federal Deregulation Task Force on the topic.

He reiterated the long-standing common view of the three accounting bodies (CA ANZ, CPA Australia and the Institute of Public Accountants) that Australia’s fractured financial reporting and audit framework is difficult to comply with and inefficiently uses the scarce resources of both business and the accounting profession. 

This complexity undermines both the value of the information it seeks and the ability of regulators to enforce the requirements.

While the discussions acknowledged that some progress had been made in the past decade, recent reports show that the scale of the problem is still considerable and growing. These reports include the 2019 AASB Research Report 10, Legislative and Regulatory Financial Reporting Requirements, which investigated the inconsistency of legislative reporting requirements and a similar study by the University of Adelaide in 2015 on audit requirements.

It is clear that only a fit-for-purpose national reporting framework will ensure the effective operation of Australian businesses, balancing the costs of preparation and audit of financial information with the necessary accountability to regulators, investors and the general public.
However, developing such a framework requires a concerted coordinated effort by all state and federal regulators. 

Nevertheless, such reform is achievable, as demonstrated by the progress of the Australian Charities and Not-for profits Commission’s (ACNC) red tape reduction initiatives in the not-for-profit sector over its 10-year existence and the 2020 completion of the nationwide adoption of the Cooperatives National Law.

All three accounting bodies lodged a formal joint submission after the meeting that calls on the Deregulation Task Force to develop a plan to achieve a simpler national legislative financial reporting and auditing framework for the for-profit and not-for-profit sector. 

This framework needs to be easy to understand and standardise inconsistent reporting obligations while ensuring the appropriate levels of accountability are applied. Such a roadmap would require all levels of government, legislators, regulators and standard setters to collaborate and agree to move together.

We now await the Federal Government’s response.

Related download

AASB Research Report 10, Legislative and Regulatory Financial Reporting Requirements

Download here