BDO urges Treasury to uphold integrity of financial reporting system
The professional services firm has said Treasury must look to improve Australia’s financial reporting system to ensure its effectiveness and integrity.
BDO Australia has submitted feedback to Treasury in response to the consultation paper on the proposed design of new institutional arrangements for Australia’s accounting, sustainability and auditing and assurance standards.
On a broader scale, BDO voiced its support for the Treasury’s proposal to consolidate standard setting within a single accounting body, by combining the Australian Accounting Standards Board (AASB), the Auditing and Assurance Board (AUASB) and the Financial Reporting Council.
However, the firm noted recommendations as well as several key areas of support in its submission to the consultation paper, ‘Positioning Australia’s Financial Reporting System for the Future.’
BDO chief executive partner Tony Schiffman said BDO backed Treasury’s proposal to combine the standard setters, yet stressed that the proposal could go further than its current scope to ensure the highest levels of financial reporting.
“We agreed with Treasury’s proposal but want to emphasis the need for an independent accounting and audit regulator, separate from ASIC, to ensure focused oversight and enhanced transparency,” he said.
In its submission and recommendations, the firm proposed several additional considerations to strengthen governance and oversight.
Recommendations included incorporating ethical standard setting into the scope of the proposed body by adding an ethical standards committee, establishing a new, independent regulator, adjusting governance and reporting requirements for large audit, assurance and consulting partnerships to ensure compliance with company reporting requirements.
BDO also recommended an independent and representative board supported by expert technical standard-setting committees with industry representation.
“Also, adding the Accounting Professional and Ethical Standards Board (APESB) functions into this proposed new structure would give ethical standards the force of law would align with international best practices,” Schiffman said.
“We think this is crucial for maintaining the integrity and quality of financial reporting in Australia.”
Schiffman said BDO was calling for a clear delineation between standard setting and enforcement within the audit and assurance space would allow for sole focus on setting standards without having to also focus on regulatory responsibility.
It was noted that the composition of the governing board and committees was also an important area of the consultation and there was a need for industry experts to be included on the board and any sub-committees of the proposed new entity.
“Considering the pace at which accounting, sustainability, and auditing and assurance standards have developed and changed in recent years, it is crucial that both the board and technical standard-setting committees include individuals with current practical experience who understand the landscape and where evolution will be required in the future,” Schiffman said.
“It would be a backward step to not include industry professionals on the board and sub-committees of the proposed new entity.”
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