Legislation to improve the quality and transparency of the auditing process has been introduced into the Parliament, said Parliamentary Secretary to the Treasurer, David Bradbury.
Mr Bradbury today introduced the Corporations Legislation Amendment (Audit Enhancement) Bill 2012 into the House of Representatives.
The Bill will introduce a range of reforms to improve the standard of audits in Australia, following on from a Treasury review of audit quality and extensive stakeholder consultation.
"While Australia has an effective audit quality framework, the reforms contained in this Bill will help to further strengthen regulatory oversight and ensure that we maintain standards in line with international best practice,” said Mr Bradbury.
Measures in the Bill include:
- Requiring audit firms to publish an annual transparency report if they conduct audits of 10 or more significant entities.
- Providing more powers to ASIC to issue an audit deficiency report in relation to an individual audit firm if it identifies an audit deficiency in the auditor's quality control system or the conduct of an audit that may be detrimental to the overall quality of the audit.
- Removing duplication of audit inspection responsibilities so that ASIC continues its audit inspection program and the Financial Reporting Council (FRC) focuses on providing strategic policy advice and reports in relation to the quality of audits conducted by Australian auditors.
- Allowing ASIC to communicate directly with an audited body. The current law prevents ASIC from being able to disclose information, because of confidentiality requirements, to an audited body or its audit committee where it becomes aware of significant matters affecting the audit of a company.
- Maintaining the five-year auditor rotation requirement but allowing a two-year extension where it will not give rise to a conflict of interest and will prevent the loss of knowledge and experience in situations where rotation could undermine the quality of the audit
29 February 2012