ASIC strong on auditor levies, less so on quality
The Australian Securities and Investments Commission (ASIC) has been more focused on the payment of levies by auditors and their submission of annual reports than on the quality of their work, according to the Australian National Audit Office (ANAO).
At a time when questions have been asked about the role of auditors in the collapse of Shield and First Guardian, the ANAO report has found ASIC to have been “partly effective” in its regulation of registered company auditors.
The ANAO report was tabled during the last week of Parliament and found that while ASIC has the fundamental components of a regulatory approach in place, it has not been paying enough heed to audit quality.
“Fundamental components of an effective regulatory approach are in place, such as ASIC’s administration of the registration of company auditors, monitoring ongoing compliance obligations such as mandatory reporting and payment of levies, and processing the resignation and removal of auditors from audit engagements,” the ANAO report says.
However, it goes on to state that “ASIC’s supervision of audit quality is based primarily on a small number of individual audit surveillances targeted at higher-risk entities and there “is limited follow-through of quality issues identified in these surveillances other than reporting thematic findings to industry annually”.
The Audit office report said ASIC has not implemented procedures for using the audit deficiency reporting process established by legislation in 2012.
“As a result of these factors, ASIC’s visibility of audit quality or the impact of its own regulatory actions is narrow,” the report says.
“ASIC has taken administrative and criminal enforcement action in the last five years; 88 per cent of cases with an enforcement result related to failure to pay levies or submit mandatory annual reporting rather than issues of audit quality or professional misconduct,” it says.
The ANAO report said it had made three recommendations related to reporting the timeliness of auditor resignation and removal approvals, reviewing the audit surveillance program to consider the place of other regulatory activities besides individual file surveillances, and following through to ensure regulated entities remedy deficiencies identified in audit surveillances.
It said five opportunities for improvement were identified including updating procedures for the assessment of registration applications, assessing whether auditor transparency reporting is achieving its intended outcomes, exploring how data generated during audit surveillances could be used to track longitudinal changes in audit quality, improving the development of communications strategies and reporting related to the surveillance program, and increasing usage of agreements with international regulators.
Sums ASIC up, collect levies and do bugger all quality regulating.
ASIC focused on generating Fees / Levies for what is NO SERVICE