AICD submission to Treasury on positioning Australia’s financial reporting system for the future

The AICD’s submission focuses on aspects of the Consultation paper that are particularly relevant to AICD members, including ensuring a stable policy environment for the implementation of mandatory climate reporting, which began 1 January 2025 for Australia’s largest companies. Our positions have been informed by consultation with members, including the AICD’s Reporting Committee, as well as industry stakeholders. We also shared industry concerns with the short 30-day consultation period and note the significant hiatus from when reform was first flagged by the Government in November 2023.

The AICD also encouraged the government, including standard setters and ASIC, to provide as much clear and consistent guidance as possible to support the implementation of the new mandatory climate reporting regime.

Our key points and recommendations included:

• Structure of the new body – The AICD in principle supports the design of the new body and the initial establishment of three dedicated technical committees which will have delegated power to perform its standard settings functions – accounting, auditing and assurance, and sustainability reporting. The AICD recommends a post implementation review occur to ensure the new body and governance structure operates as intended. However, given we are still awaiting the Government’s response to the recent Parliamentary Joint Committee on Corporations and Financial Services 2023 inquiry into the audit, assurance and consultancy industry (PJC Report), and Treasury’s ongoing consideration of the regulation of accounting, auditing and consulting firms in Australia (Treasury consultation), we would ask that a holistic approach be taken.
• Issuing standards – The AICD strongly believes legislation should transparently define the roles and powers of the new Board and the standard setting committees to preserve market confidence and certainty. We support the technical committees retaining their distinctiveness and ability to freely and directly engage with international counterparts such as the AASB Chair co-chairing the International Forum of Accounting Standard Setters.
• Transparency measures – The AICD supports public accountability mechanisms such as publishing the Statement of Expectations and the Statements of Intent.
• Board and committee appointment eligibility – As highlighted in the AICD’s submission to the Government’s Public Sector Appointment Review, appointments to public sector boards should follow processes that are transparent, rigorous and driven by skills matrices.