ASIC pledges to reduce regulatory complexity as aspiring auditors report barriers

Joe Longo, chair of ASIC, has pledged to “slash red tape” and make regulation clearer, more accessible and easier to navigate in a bid to support the government’s productivity-boosting agenda.

“It is our aim that by making it easier to find information and interact with us, businesses will be able to comply more easily with their legal obligations, which in turn will benefit consumers,” Longo wrote in the report foreword.

“Not only has this complexity hindered our work to enforce the law, it has also had a significant chilling effect on business. It has raised the cost of doing business, made compliance more time consuming, and can stifle innovation and entrepreneurial drive throughout the economy.”

ASIC said it was committed to change through four key avenues: improving access to regulatory information, reducing complexity in regulatory instruments, making it easier to interact with ASIC and simplification through law reform.

Longo said that the regulator would embark on a “multi-year program of work” to streamline regulations, and that ASIC would seek feedback from stakeholders who engage with them.

“We want to hear from those who engage with ASIC—what works, what doesn’t, and what would make the biggest difference.”

Previously, accounting bodies have called for an overhaul of ASIC’s entry requirements for financial advisors and auditors, warning that overly onerous requirements were contributing to talent shortages.

Kirk Davis, aspiring auditor and principal of Kirk Davis Accounting, said that ASIC’s auditor entry requirements – particularly the requirement to supervise staff – posed significant barriers to sole traders.

ASIC’s internal policy stipulates that successful RCA applicants must have “experience in all key aspects of audit engagements, including planning, executing and finalising audits, and supervising staff undertaking audit work.”

However, Davis argued that ASIC’s staff supervision requirement was not explicitly mandated under the Corporations Act, and placed unnecessary compliance burdens on small businesses that went beyond what was legislated.

He said that the staff supervision requirements had barred him from completing his registered company auditor (RCA) registration, despite having spent over 3,000 hours working on audits and being mentored by an RCA for over 750 hours.

In Davis’ view, ASIC’s requirements for RCA status often assumed the operational model of a larger firm, including extensive timekeeping, mentorship programs, and specific audit structures.

“Smaller firms, however, typically operate differently, with fewer staff and less formalised systems,” he said.

Following feedback from accounting bodies, the Productivity Commission proposed that regulators should revise requirements for registered company auditors (RCAs) by introducing a tier of licensing for lower-risk assurance activities.

“The Australian government should consider a more nuanced approach to licensing RCAs, including the addition of a lower-tier licence for low-risk audits,” the Productivity Commission said.

Currently, all Australian RCAs must complete at least a three-year qualification in accounting, a two-year qualification in law, a prescribed auditing course and a logbook of experience in auditing competencies across the previous three to five years.

By contrast, New Zealand provided two tiers of licensing for auditors, with different requirements for different assurance risk levels.

CPA Australia warned that the current regulatory demands for RCAs disproportionately impacted small accounting firms and sole practitioners. It added that the number of RCAs has declined from more than 7,000 to 3,200 over the 20 years to 2025, while demand has increased.

“The entry requirements for RCAs are highly restrictive, which is necessary to ensure the appropriate level of expertise and regulatory oversight for the audit of highly complex entities such as listed companies or multinational enterprises,” Chris Freeland, chief executive of CPA Australia, said.

“However, the current entry requirements do not adequately differentiate between various audit risks, leading to unnecessary barriers and costs for lower-risk audit engagements. This risks undermining the pipeline of future auditors at a time when demand for independent assurance is growing, particularly in emerging areas like sustainability reporting.”