Accounting bodies urge Treasury to take its time with big firm regulation

“Professional bodies, regulators, firms and other oversight bodies all have important and complementary roles to play in supporting high standards and accountability in the profession,” the spokesperson said.

“It’s important the options are assessed carefully, so that any changes are effective, including that ASIC has sufficient resources to fulfil any expanded remit, that avoids unintended consequences for smaller firms,” the CA ANZ spokesperson said.

“Underpinning trust in the profession are strong professional standards, ethics education and an effective, independent disciplinary framework,” the spokesperson added.

Also speaking with Accountants Daily, CPA Australia audit and assurance lead Tiffany Tan (pictured) said that the options paper was “...a useful prompt for firms to reflect on their own governance, independence settings and quality-management arrangements.”

“It is sensible for Treasury to consider whether Australia’s regulatory framework should better reflect how large multidisciplinary firms actually operate.”

Tan noted the importance for Treasury to implement a proportional approach in its measures. 

“The governance risks in a large multidisciplinary firm are very different from those in a smaller practice servicing SMEs or non-listed entities.”

“We believe it makes sense for the Options Paper to consider regulating the largest firms in a way that better aligns with international best practice.”

In light of the vulnerability of smaller firms compared to their larger counterparts, Tan noted the financial burden that further regulation imposes on them.

“Cost implications are critical, particularly for smaller firms. They do not have the same resources to absorb additional regulatory and compliance costs and, if the burden becomes too high, some may be forced to exit the market because it becomes unsustainable, further concentration in the market, that would be an unintended and undesirable outcome.”

“Reform therefore needs to be carefully calibrated so that it strengthens confidence without undermining competition, choice or the viability of smaller firms.”

Tan said that the options paper can drive positive improvement if it focuses on outcomes rather than processes, through stronger accountability, better transparency, clearer governance expectations, and more effective oversight, while allowing different types of firms to meet those expectations in ways that reflect their size, complexity, and client base.

For firms, while the changes are still pending the end of the consultation period and legislative release, Tan said there are still things firms can do.

“Firms can be proactive by reviewing whether their internal governance is robust, transparent and aligned with public-interest expectations,” Tan said.

“For smaller firms, the key is to stay engaged in the consultation process and consider how the different options may affect their practice and clients.”