Regulation of accounting, auditing and consulting firms in Australia options paper status

Question

Senator BARBARA POCOCK: I want to come to Treasury's paper Regulation of accounting, auditing and consulting firms in Australia. This paper was published over two years ago and we haven't heard any progress since except through an FOI. FOI 4201 reveals that, as of 2024, the Treasury was preparing 'an options paper addressing issues examined during this consultation'. Where is that options paper? Mr Quinlivan: Following that FOI, there were discussions with the government about what options there could be, and there was a process discussed about- Senator BARBARA POCOCK: I'm sorry, I can't hear you. Mr Quinlivan: There was a process discussed about what the next step would be. Options were provided at the time, but that was to the former Assistant Treasurer at that time. Following the change in Assistant Treasurer, updated advice had been provided to him about what the next steps could look like, and the timing of that is a matter for government. Senator BARBARA POCOCK: You've put options to the government in relation to this paper? Mr Quinlivan: That's right; on what a consultation process could look like for taking policy options forward. Senator BARBARA POCOCK: The FOI committed to an options paper. Has an options paper been prepared? Mr Quinlivan: A draft was prepared. Senator BARBARA POCOCK: When was that prepared? Mr Quinlivan: There was one prepared shortly after that. Senator BARBARA POCOCK: Back in mid-2024- Mr Quinlivan: There was one provided to the former Assistant Treasurer. Senator BARBARA POCOCK: Two years ago. Minister, why have we not seen any progress on this paper, which is incredibly timely today? Why have we seen nothing happen? Senator Gallagher: I would have to take that on notice and come back to you. Senator BARBARA POCOCK: I want to go to this paper because it's a very good paper. It foreshadows all of the mess that we're dealing with today in relation to KPMG. It lays out the issues really clearly in relation to the adequacy of prescribed governance requirements; adequacy of current professional standards, regulations, and laws; whether the transparency requirements for accounting, audit and consulting firms are sufficient; adequacy of regulatory enforcement; protection of whistleblowers; and competition and resilience in the audit sector. You couldn't have written a more relevant shopping list for things that need fixing in order to prevent the mire that we're now embedded in with KPMG. I want to go to page 13 of the paper, where the issue of partnerships is surfaced. It states that the current partnership limit of 1,000 for accountants may be too high. Our inquiry reported it should be 400; the Greens said it should be 100. It continues that 'in the absence of mandated governance requirements' or transparency requirements 'the capacity to identify and properly assess risks may be impaired in large partnerships'. Further, the report goes on to state that the growth of multidisciplinary firms raises concerns around the adequacy of penalties in the event of a breach. It then goes on to specifically canvas a bunch of audit standards and the way they are implemented inadequately. Minister, when will you provide an options paper out of this work? Senator Gallagher: I'll see if there's anything I can provide to you. I'll take it on notice. Senator BARBARA POCOCK: The FOI also showed that the minister was given a recommendation to approve the publication of all non-confidential submissions to the consultation paper. Two years on, we haven't seen anything of those submissions. Why have we not seen any of that material? They weren't considered confidential by the people who put them in. Why has the government not provided those? Senator Gallagher: I'll incorporate all of that into an answer coming back to you on notice. I'm not in a position to answer that today.

Answer

See attached response.

Documents

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• SQ26-000441 Regulation of accounting auditing and consulting firms in Australia options paper status.pdf (opens in a new tab)