ASIC could and should act by cancelling PwC’s AFSL

The Australian Securities and Investments Commission (ASIC) could and should have acted with respect to the PwC breaches and has, thus far, failed to discharge its duty, according to four University of Wollongong academics.

In doing so they have called on ASIC to cancel PwC’s Australian Financial Services License (AFSL) and have described the Tax Practitioner’s Board (TPB) and major accounting groups, CPA Australia and Chartered Accountants -ANZ as having “acted like a guild for tax practitioners willing to protect their colleagues and the profession”.

The academics have told a Parliamentary Committee that ASIC needs to act because the major accounting bodies “cannot be relied upon to discharge their duties”.

The submission, filed with the Senate Economics References Committee inquiry into ASIC, said that while it is true that the regulation of ethical and professional standards is left to accounting professional associations including CA-ANZ and CPA Australia, “it is not tue that ASIC lack statutory power to act.

The four academics, Associate Professor, Dr Andy Schmulow, Professor of Practice, Professor Brendon Lyon, Associate Professor, Corinne Cortese and Adjust Professor, Dr John-Paul Monck claimed that the Corporations Act provided ASIC with heads of power over the accounting profession “which they can and should use now”.

In doing so, they cited sections of the legislation which provide “ASIC with the statutory power to deregister all professional accountants who are members of CA-ANZ and CPA Australia.

“The power vested in ASIC under ss(3) is sufficient that, if the threat of the use thereof was credible, it would provide sufficient incentive for CAANZ and CPA Australia to undertake meaningful investigations of the Big Four audit firms, for their various and notable breaches of APES 110, and other professional and ethical obligations; and where necessary, to levy appropriate penalties,” the submission said.

The academics said that there appeared to be other steps that ASIC could have taken with respect to PWC which appeared to have been overlooked including that PWC Australia owns a company, the purpose of which is the provision of tax services.

“As such, this entity has directors, and they are subject to director’s duties which, are in turn, enforced by ASIC. It is open to question, therefore, whether ASIC could have taken steps against the director(s) of this company,”

The submission also points out that PwC is the holder of an Australian Financial Services License (AFSL) and that ASIC is empowered to cancel the AFSL of any individual who is not deemed to be a fit and proper person.