FRC, AASB, AUASB set to merge after passage of legislation

ERA will be led by a governing council, which will be the accountable authority for ERA and will have an oversight role covering the body's full remit.

The Greens party secured amendments to the bill that would prevent representatives of large auditing and consulting firms from serving on External Reporting Australia's governing Council or its standard-setting boards.

The amendments by the Greens define who may be appointed to the governance bodies of External Reporting Australia by explicitly excluding current partners and directors of major auditing firms and former partners or directors who continue to receive material benefits from or hold shares in those firms.

"Regulators and standard setters must be genuinely financially independent of the industries they oversee," said senator Barbara Pocock.

The opposition has been firmly opposed to the proposal to merge the financial reporting bodies and previously said that the three bodies were long-standing, well-respected institutions that have served Australia well.

"The highly technical work of financial standards setting organisations is not well known to the broader Australian community. However, their expertise has helped to ensure Australia remains an attractive place for investment that aligns with international norms and expectations," the Coalition said.

The Coalition also warned that merging the three bodies would concentrate power in a ministerially appointed Governing Council and weaken the technical independence of standard-setters.

Assistant Treasurer Daniel Mulino said the legislation delivered the biggest reform to our financial reporting standard-setting institutions in over two decades.

"Our standard setters play a crucial role, supporting the integrity of markets, enhancing investor confidence and ensuring accountability in public sector institutions," he said.

"The creation of ERA will facilitate a key enhancement to the development and maintenance of standards for sustainability reporting—with the establishment of a standalone specialist board within ERA to undertake this work."

Mulino said that by establishing a single body, the bill removes structural barriers and improves the capacity of Australia's standard-setting framework to adapt to emerging issues and evolving priorities over time.

"This includes taking on new standard-setting functions in the future if required," he said.

Mulino said Australia would also continue to benefit from the high degree of skills and experience that professional experts in each relevant field bring to settling the technical aspects of our accounting, auditing, assurance, and sustainability standards.

"ERA's new structure will allow it to effectively marshal and harness this expertise within the construct of a single entity by providing for day-to-day standard setting to continue to be undertaken by boards constituted by technical experts," he said.

The reforms also strengthen accountability by introducing new transparency and conflict-of-interest requirements for ERA, he added.