CPA Australia responds to draft legislation on oversight body merger

Responding to draft legislation that will combine the Australian Accounting Standards Board (AASB), Auditing and Assurance Standards Board (AUSB) and Financial Reporting Council (FRC) into a single body called ‘External Reporting Australia’, CPA Australia’s Financial Reporting Lead Ram Subramanian said:

• “As a supporter of the government proposals to establish a new standard setting body that can more efficiently and effectively serve the long-term needs of Australia’s reporting and assurance system, CPA Australia welcomes the draft legislation providing details around this new structure.
• “We welcome the proposal to remove the current function of providing strategic policy advice and reports on audit quality, and any mandatory investigation powers. This role is already carried out by ASIC to a great extent.
• “The devil is going to be in the detail of the legislative instruments that will create the new technical standard-setting boards for financial reporting, sustainability reporting and audit & assurance. We look forward to contributing to engaging on the shaping of subordinate law on this critical aspect of the new structure.
• “The proposed governing council appears to be vested with too much power presently. There needs to be adequate oversight of the governing council’s decisions around matters such as the size of the standard-setting boards and the role and responsibilities of the board chairs.
• “It is not clear how appropriate checks and balances will be in place when there is bifurcation of the technical activity that will occur within the new standard-setting boards while overall responsibility for such activity will rest with the governing council.
• “Many of the attributes within the current structure work well and should be absorbed into the new model. As an adopter of international standards, it is critical the new structure has ability to represent our economic interests at the international standard-setting table.
• “We welcome the proposals for the establishment of a new standard-setting board with responsibility for sustainability reporting standards. This is something CPA Australia has long advocated for.”