The Parliamentary Joint Committee on Corporations and Financial Services is holding an inquiry into the regulation of auditing in Australia. Public hearings will be held across November and December with the Inquiry to report by 1 March 2020. A number of submissions have been made by interested parties and the terms of the Inquiry have been the subject of fairly extensive media reporting.
The AICD consulted with its members via a member wide survey, in one on one meetings, and at Divisional Councils. We also sent a survey out to ASX Chairs and we thank you for your assistance in helping us formulate an informed perspective. The final direction of the submission was also the subject of discussion at meetings of the AICD’s Reporting Committee.
The AICD’s submission to the Parliamentary Inquiry made the following key points:
- directors remain confident in the overall quality and regulation of audit in Australia;
- external audit receives substantial attention at board level, and is a significant focus of the work program of board audit committees in larger entities;
- governance practices to support auditor independence are widely applied, including board-applied limits/approval for non-audit services and rotation of audit partners;
- more complex financial reporting requirements, accounting standards and the need for assurance on a wider array of corporate reports contribute to a demanding environment for management and boards as well as external audit firms and standard setters;
- while market concentration in large audit firms is recognised, it is not perceived to be negatively impacting the capacity of firms to source quality independent audit services.
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