Submission – Regulation of accounting, auditing and consulting firms in

Australia’s audit framework sits at the heart of confidence in capital markets, superannuation and corporate reporting. Yet over the past decade, a series of regulatory reviews, Parliamentary inquiries and surveillance activities have identified recurring concerns about audit quality, accountability and governance. Collectively, these reviews suggest that while individual auditors are well regulated, many of the factors that drive audit quality are determined at the firm level, where regulatory oversight and accountability are insufficient. These recent scandals and reviews paint a clear picture that Australia’s regulatory framework has not kept pace with the scale, complexity and conduct of large audit, accounting and consulting firms.

Audit firms operate as critical gatekeepers for the super system. Their work supports the reliability of information that super funds use to invest the retirement savings owned by millions of everyday Australians and provides assurance of the funds’ own regulated reporting obligations. For super funds, rigorous audits test more than financial statements. They also examine compliance frameworks, unit pricing frameworks, risk management frameworks, internal control design and operational effectiveness. When audits are not rigorous enough, practical harms can follow. They provide an independent examination of funds risk functions, operational processes and financial and investment systems. A strong and trusted audit framework supports market integrity, member protection and confidence that trustees are meeting their obligations in members’ best financial interests. In this submission, SMC makes seven recommendations focused on strengthening audit quality, accountability and ultimately market confidence.