APESB urges tougher regulatory oversight of accountants

The Accounting Professional and Ethical Standards Board (APESB) has recommended a new, independent regulator to oversee the monitoring and disciplinary activities of professional services firms employing accountants and consultants.

In doing so, the APESB has told a Parliamentary committee that the existing co-regulatory arrangements involving the major accounting bodies has been an ineffective patchwork.

At the same time the APESB has suggested that the Australian Securities and Investments Commission (ASIC) or a new regulator should have oversight of the monitoring programs of the major accounting bodies – CPA Australia, CA-ANZ and IPA.

The APESB has made its views clear in a submission to the Parliamentary Joint Committee inquiry set up in the wake of the PWC scandal.

The APESB said that the current regulatory framework for professional accountants was described as -co-regulatory as a number of bodies monitored and oversaw the different services provided by professional accountants, such as:

• audit services (for entities reporting under the Corporations Act 2001) are regulated by the Australian Securities and Investments Commission (ASIC);
• tax services are overseen by the Tax Practitioners Board (TPB); and
• all other services that professional accountants provide will fall under the monitoring and enforcement of the relevant professional bodies, such as CA ANZ, CPA Australia and IPA.

“However, this approach has had varying success, with the recent ethical failures highlighting the ineffectiveness of the patchwork of regulations and related monitoring and enforcement activities,” it said.

“APESB considers that the regulatory landscape would be more effective by introducing a new independent regulator to oversee the monitoring and disciplinary activities of professional services firms (accounting and other consultants), which may not currently be subject to appropriate regulatory oversight.”

“The independent body would undertake enforcement actions where appropriate and publish annual public reports on its monitoring and enforcement activities.”

“APESB acknowledges that such a change will impact the whole profession, not just the large firms. Therefore, before such reform is implemented, we urge the Federal Government to consider the breadth of accounting firms and ensure that any reforms are implemented without imposing undue burdens on Small and Medium Practitioners (SMPs) and sole practitioners.”

“We also acknowledge that establishing a new regulator takes time and significant resources. Therefore, APESB have also considered what other reforms could be considered to enhance the current regulatory framework.”