CPA Australia urges targeted approach to audit reform

• CPA Australia says audit quality, independence and public confidence must remain the focus
• Reforms should be risk-based and avoid unnecessary costs or reduced competition in the audit market

CPA Australia says Treasury’s long-awaited Options Paper on audit and accounting firm regulation is an important opportunity to strengthen public confidence in the integrity of Australia’s financial markets.

The paper released on Wednesday canvasses a range of reforms aimed at improving accountability, governance, audit quality and oversight across the profession.

CPA Australia Audit and Assurance Lead Tiffany Tan said the paper had been a long time coming and any reform package should be carefully targeted to address genuine gaps in oversight while preserving competition, choice and proportionality across the audit market.

“Treasury’s Options Paper is an important contribution to the discussion about how we strengthen public confidence in the integrity of Australia’s financial markets,” Ms Tan said.

“The audit profession plays a critical public-interest role. Independent, high-quality audits underpin confidence in financial reporting, support informed investment decisions and help maintain trust in Australia’s capital markets.”

The Options Paper includes proposals that could affect the structure, regulatory oversight and accountability of audit and accounting firms, including measures relating to structural separation of firms, requiring reporting entities to obtain audit services only from an authorised audit company and reducing the partnership limit. 

Ms Tan said regulators should focus reform efforts on the areas that pose the greatest risk to audit quality, independence and public confidence. 

“We support a targeted, risk-based approach that addresses genuine gaps in oversight without imposing unnecessary burdens across the profession.”

“The greatest regulatory attention should be directed to areas with the highest public-interest impact, particularly where questions around accountability, conflicts of interest and firm-level governance arise.”

Ms Tan said reforms must recognise the diversity of the audit profession, including differences between large multidisciplinary firms and smaller audit practices servicing non-corporate sector.

“Reforms must be carefully calibrated to avoid unnecessary costs, duplication or unintended consequences, particularly for smaller audit firms. While all audit firms must meet high standards, regulatory obligations should reflect differences in firm size, complexity, client base and public-interest impact.

“If smaller firms are caught up in disproportionately onerous obligations, their clients may also be negatively affected.”

Ms Tan said comparable jurisdictions had generally pursued targeted measures rather than broad-brush reform, and Australia should consider international experience carefully as consultation progresses.

“The Treasury paper sets out a range of reforms options that require careful consideration. We observe that comparable jurisdictions have generally favoured more targeted measures, such as operational separation, non-audit service restrictions, stronger oversight and enforcement.”

Ms Tan said reform should improve audit quality and market integrity without creating barriers that reduce the number or diversity of firms able to participate in the audit market.

“Getting the balance right is critical. Reform should enhance confidence and audit quality without creating costs and complexity that ultimately reduce competition and choice in the audit market.”

Media contact

Camille Hanton
External Affairs Lead
[email protected]
0431 180 475