Follow TopicFollow Contributor Share Feedback
Australia's ASIC Faces Criticism over Audit Supervision

Australia's ASIC Faces Criticism over Audit Supervision

by Starling Insights

Starling Insights Editorial Board

Apr 19, 2024


In his recent submission to a Senate inquiry, Doug Niven, former Chief Accountant at the Australian Securities and Investments Commission (ASIC) for over 25 years, criticized the regulator's oversight of major audit firms.

Niven questioned ASIC's decision to eliminate its annual audit quality report card on major auditors like Deloitte, PwC, KPMG, and EY. "Rightly or wrongly, reduced audit file reviews could be perceived by some to be a response to inappropriate criticism by some auditors of findings and the transparency on those findings," Niven said 

ASIC's shift to a "data-led, risk-based approach" resulted in fewer audit reviews, with the regulator conducting only 15 in 2022-23 compared to 45 in the previous two years. Niven found this reduction "concerning," especially after international counterparts increased their reviews. "A problem does not cease to exist just because evidence of the extent of the problem is less apparent," he argued. 

Niven argued that establishing a new, independent regulator would ensure that funds were allocated more appropriately and would attract more professionals to auditing and oversight roles. Niven also expressed worries that ASIC's new audit oversight model risks eroding confidence in audits. "Consistent with my concern with the reduced level of ASIC's proactive audit file reviews, it is of concern that ASIC has reduced numbers of suitably qualified and experienced financial reporting and audit staff," he said. 

In its own response to the Senate inquiry, ASIC argued that its previous approach to audit quality oversight was ineffective and "at risk" of enabling regulatory capture. "It was unlikely to identify actionable misconduct and was at risk of being influenced by discussions with audit firms themselves," a spokesperson said. "And because we are reviewing audits where changes have been made or where we have concerns about material misstatement, [it] is more likely than the old approach to result in ASIC action," they added.

Join The Discussion

See something that doesn't look quite right?

We strive to provide high quality and accurate content at all times. With that said, we realize that sometimes links break, new information becomes available, or there is something that you feel we may have missed.

If you see something that you think we should be aware of, we would love to hear from you. Feel free to drop us a note below and leave your name and contact info if you'd like to hear back from us.

Thank you for being a key part of the Starling Insights community!