Committee releases final report for PwC inquiry
The committee has made a raft of recommendations aimed at the consulting and accounting sectors in its final report for the consulting firm inquiry.
The Senate Finance and Public Administration References Committee has now tabled its final report into the Inquiry into Management and Assurance of Integrity by Consulting Services.
The final report makes 12 recommendations focused on creating more transparency and accountability around government contracts and the creation of a Joint Standing Committee that would review and approve consultancy and services contracts.
The committee has also recommended that the government commissions the Australian Law Reform Commission, or another appropriate body, to review the legislative frameworks and structures of partnerships in Australia.
The review will have a particular focus on partnerships with over 100 partners.
“The review should make recommendations to provide for appropriate regulatory governance and oversight of structures of this scale,” the report said.
The report stated that it was clear that that large partnership structures, which operate effectively as corporations, and often as multi-national corporations, are not subject to the same regulatory oversight and declaration requirements as those constituted under a corporate structure.
Events in the past two years at PwC it said demonstrated that in large-scale partnerships, a partner couldn't have the level of oversight required to effectively protect their individual interests.
“Many partners of PwC have learnt that lesson at their own significant cost in the aftermath of that scandal,” the report said.
“Indeed, the committee heard that once a partnership grows beyond 100 partners it becomes difficult for partners to effectively manage their individual interests.
“In evidence to the Senate Standing Legislation Committee for Economics Estimates hearings, ASIC advised that while partnerships are legislated at a state and territory level, there is effectively no regulatory oversight infrastructure to monitor and provide oversight of partnerships.”
The committee also said that organisations that operate professional standards as self-regulatory regimes should be required to report annually on the operation of those standards to the Joint Standing Committee on Corporations and Financial Services.
In its report, the committee said that for the Australian public service to be assured of the integrity of the consulting services that it procures, improved oversight and regulation of bodies like CA ANZ, CPA Australia, and the Institute of Public Accountants is required.
“The committee is concerned that where Parliaments have given the privilege of self-regulatory structures to professional bodies, such as the above, it is appropriate that there is a level of scrutiny as to how those self-regulatory structures and standards are managed and applied,” the report said.
Professional standards are established and regulated under a series of state, territory and Commonwealth legislation that comes together under the Professional Standards Council, the report noted.
“While the committee acknowledges that this arrangement is a form of regulation which can work effectively, this inquiry has raised questions in relation to the application of some standards systems,” it said.
“Accordingly, the committee is of the view that organisations that operate under those arrangements should report on an annual basis to the Parliament which provides the imprimatur for the standards with the opportunity for parliament to interrogate those annual reports.”
