CPA backs ANAO’s ‘partly effective’ call on ASIC auditor regulation

CPA Australia has voiced its support and agreement with the Australian National Audit Office’s (ANAO) view of ASIC’s regulation of registered company auditors to be “partly effective”.

Last week (4 December), and as previously reported by Accounting Times, the ANAO published its performance audit report into the corporate watchdog’s regulation of registered company auditors.

Within the report, the ANAO identified significant holes in ASIC’s regulation of auditors and made various key recommendations to improve its regulatory approach.

From these recommendations, the ANAO proposed looking at improving the key areas of performance management, follow-through, enforcement focus, stakeholder engagement and ministerial expectations.

CPA Australia agreed with the viewpoint, according to CPA audit and assurance lead Tiffany Tan.

Tan said while governance structures existed, the absence of performance metrics limited transparency and accountability.

“Registered company auditors play a critical role in safeguarding Australia’s financial markets. The ANAO report highlights key areas for improvement, and we commend ASIC for taking early steps to implement several recommendations,” she said.

“Strengthening audit regulation is an important issue for the profession. We welcome ASIC’s early initiatives and reiterate our commitment to a collective solution that enhances audit quality and market integrity.”

“The report is an opportunity to reflect, improve and strengthen trust in the system that is so crucial to upholding the integrity of our financial markets.”

In late October (31 October), ASIC published findings from the 2024/25 surveillance program, which revealed that the watchdog had reviewed 254 company financial reports, conducted 22 surveillance activities, and reviewed 10 audit files at eight audit firms.

From these reviews, ASIC commissioner Kate O’Rourke said reliable financial information remained more important than ever, particularly as entities with unlisted assets, such as superannuation funds and private credit funds, played a bigger role in the economy.

“Accurate, accessible and reliable financial information is essential for business and markets to work well. All participants in our economy rely on those preparing financial information to do so carefully and fairly, and those auditing that information to do so with skill, professionalism and independence.”

Though the regulator said improvement was needed for auditors in the delivery of higher-quality financial reports and audits, and that auditors needed to be more proactive in ensuring their independence and reporting significant contraventions, the ANAO report uncovered that the regulator itself had some major areas to improve.

On this, Tan said CPA was pleased to see that ASIC’s 2024/25 surveillance program included an increase in audit file reviews and the use of random selection, which was a welcome initiative and positive step toward strengthening audit oversight.

“CPA Australia stands ready to work with ASIC and other stakeholders to implement these changes and strengthen trust in Australia’s financial reporting framework.”

The ANAO said that following its report, Treasury and ASIC accepted and agreed to all the findings and recommendations for areas of improvement.