Treasurer unveils plans to overhaul financial reporting system
The government plans to combine the bodies responsible for setting and overseeing accounting and assurance standards into a single entity.
Treasury has released a consultation paper outlining its plans to streamline the Australian Accounting Standards Board (AASB), Auditing and Assurance Standards Board (AUASB) and the Financial Reporting Council (FRC) into a single body containing various expert committees.
“This reform will provide a one stop shop for the development and issuance of standards,” Treasury wrote in a statement yesterday.
“It will help to increase regulatory consistency, reduce unnecessary costs and avoid duplication when it comes to financial reporting.”
These amendments have been proposed in response to global shifts in financial reporting practices, as investors become increasingly conscious of ESG standards. This has led to a heightened demand for transparency in the form of high-quality, standardised financial disclosures, according to Treasury.
“Financial markets are recognising that a wider range of factors, including environmental, social and governance concerns, are important sources of material financial risks and opportunities for businesses and financial institutions,” the consultation paper read.
According to the consultation paper, the new body would be responsible for advising the government and issuing standards relating to accounting, auditing and assurance, and sustainability.
“Consolidating standard setting within a single body with greater structural flexibility, while leveraging the existing bodies’ standard setting expertise and credibility, will better position Australia’s financial reporting system for the future,” the consultation paper said.
Treasury also highlighted that the new body would be better placed to support the ongoing development of climate-related financial disclosure standards.
The government is seeking feedback regarding the proposed body’s structure, its model for issuing standards, and its mechanisms to ensure transparency and address conflicts of interest.
The consultation will be open until 21 February, and the paper is available on the Treasury website.
