CPA Australia has called on the federal government to close a regulatory gap in the supervision of audit firms by introducing direct firm-level oversight, without triggering costly structural changes.
In its submission to Treasury’s review of accounting, auditing and consulting firm regulation, the body outlined a roadmap built around firm registration, enhanced monitoring, proportionate enforcement and greater transparency.
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CPA Australia Audit and Assurance lead Tiffany Tan said: “The issue is not that Australia needs to redesign the audit market.
“The issue is that regulators do not have equivalent direct oversight of all audit firms, particularly partnerships.
“A well-designed firm-level registration regime could bring all audit firms within ASIC’s remit, regardless of their legal structure.
“It would improve accountability without forcing firms to incorporate, divide their businesses or introduce measures that create widespread disruption.”
The submission proposed an entity-neutral registration regime, drawing in part on the Tax Agent Services Act 2009.
The framework would apply uniformly to partnerships, companies and other audit practice structures, with requirements focused on quality management, independence, ethics, governance and transparency.
Tan noted that the targeted firm-level rules would make “several more disruptive proposals unnecessary”.
CPA Australia also stressed that reforms must reflect Australia’s links to global financial markets.
The organisation added that it does not support mandatory structural separation of audit and non-audit services.
It likewise rejected importing a UK-style whitelist of permitted non-audit services in place of “evidence-based safeguards”.
Instead, it recommended formal audit committee pre-approval of services, continued alignment with APES 110, and fuller disclosure of audit, non-audit and sustainability assurance fees.
It also backed stronger governance and transparency obligations for large audit firms via a comply-or-explain governance code.
