Stronger accountability and integrity safeguards required in standards-setting merger, says CPA Australia

CPA Australia has urged the federal government to strengthen accountability and integrity measures in its proposed reforms to Australia’s financial reporting system, warning that the current draft legislation risks undermining confidence in the independence of standard-setting.

The Treasury Laws Amendment Bill 2025 proposes restructuring the three existing oversight and standard-setting bodies – the Australian Accounting Standards Board (AASB), Auditing and Assurance Standards Board (AUSB) and Financial Reporting Council (FRC) – into a new entity called External Reporting Australia. 

There will be an overarching Governing Council and three standard-setting bodies initially that will cover accounting, audit and assurance, and sustainability reporting.

While CPA Australia supports modernising the reporting framework through a new body that will include a sustainability standards board, it has raised concerns about governance and due process under the new model.

Ram Subramanian, CPA Australia’s Financial Reporting Lead, said: “Independence and transparency are fundamental to credible standard-setting, and while we welcome the flexibility that comes with the new model, every effort must be made to ensure that accountability and integrity are evidenced at all times.

“The current draft legislation gives the Governing Council significant powers without adequate safeguards, including the ability to make or vary standards and determine the structure and composition of the standard-setting boards. This creates a real risk of undue influence and erodes the integrity of the process.”

CPA Australia and Chartered Accountants Australia and New Zealand highlight the following issues with the current draft legislation in a joint submission to Treasury:

• Insufficient due process: A detailed due process framework is needed. This should be established and referenced in the draft bill.
• Governance risks: The Governing Council and ministerial involvement in technical standard-setting runs the risk of undermining transparency and stakeholder confidence.
• Preserve existing strengths: Whilst this is recognised in principle, the details need to recognise and bring forward some of the existing strengths like research capabilities, international relationships and intellectual capital.

Mr Subramanian added: “We’re calling for clear legislative requirements for transparency, public consultation and balanced representation on the Governing Council and boards. Without these, Australia risks losing the strengths of its current model and diminishing its influence internationally.”

CPA Australia recommends amendments to enshrine robust governance, including:

• Minimum board sizes and balanced multi-stakeholder representation.
• Recognition of a detailed due process framework.
• Removal of provisions that undermine the balance between the overall governance needs and technical standard-setting work.

“These reforms are an opportunity to future-proof Australia’s reporting system,” said Mr Subramanian. “But flexibility must not come at the expense of accountability and integrity.”

Media contact

Simon Downes, External Affairs Lead
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+61 0401 461 503