Australia is set to strengthen oversight of the country’s largest accounting firms following a series of governance failures involving Deloitte, EY, PwC and KPMG.
The Australian government has directed the Australian Securities and Investments Commission (ASIC) to improve regulation of accounting and auditing firms as part of efforts to enhance accountability, transparency and oversight across the sector.
While the government has not announced the final regulatory framework, it has proposed bringing the firms under ASIC’s direct regulatory purview and granting the watchdog stronger enforcement powers and higher penalties to address misconduct. ASIC has also said it will examine whistleblower complaints across the audit industry while continuing a separate investigation into allegations involving KPMG.
The latest action follows several controversies that have affected each of the Big Four firms in recent years.
KPMG is facing allegations that employees misused confidential government information to secure contracts. Earlier this year, EY dismissed two employees after they allegedly accessed the Australian Prime Minister’s personal banking information without authorisation.
PwC came under intense scrutiny in 2023 after confidential government tax policy information was allegedly shared internally to help the firm attract private sector clients. The controversy prompted parliamentary inquiries and broader questions about conflicts of interest within the consulting industry.
Last year, Deloitte apologised after academics found AI-generated fabrications in a report the firm had prepared for an Australian government department.
The Australian government is also considering wider structural reforms, including whether breaking up the Big Four firms should be explored as a long-term option. In addition, ASIC has been instructed to maintain higher standards across the country’s pension sector, strengthen enforcement against corporate greenwashing and ensure the resilience of financial market infrastructure.
The proposed reforms mark one of Australia’s most significant efforts in recent years to increase oversight of the accounting and consulting industry. With multiple investigations underway and new regulatory powers under consideration, the government’s focus is on improving governance standards and reinforcing confidence in firms that play a central role in auditing businesses and advising both the public and private sectors.
Source: Reuters via The Economic Times
