Australia’s audit profession is facing heightened regulatory attention after the Australian Securities and Investments Commission (ASIC) widened its review of audit-related complaints to encompass every member of the Big Four accounting firms.
The initiative forms part of a broader push by Australian authorities to strengthen confidence in the audit market following several governance controversies involving major professional services firms.
ASIC Expands Its Scope
Rather than focusing on a single firm, ASIC will now review how each of the Big Four firms has managed internal audit conduct issues and whistleblower complaints.
The review will examine whether firms have appropriate processes for identifying, investigating and responding to concerns raised about audit practices, including matters involving confidential information.
This broader exercise is separate from ASIC’s existing enforcement investigation into KPMG Australia, which relates to allegations that confidential client information may have been used improperly in connection with consulting work.
Regulatory Reform Under Consideration
ASIC’s announcement comes as Australia’s Treasury seeks feedback on a package of proposed reforms aimed at the country’s largest accounting and consulting organisations.
The consultation includes proposals that could:
- Increase ASIC’s supervisory powers.
- Introduce stronger governance obligations.
- Improve accountability within large professional services firms.
- Enhance oversight of audit activities.
- Consider structural changes to reduce conflicts of interest and improve independence.
The review reflects growing concern among policymakers that existing regulatory frameworks may not adequately address risks within complex multidisciplinary firms.
Industry Responses
The firms reacted differently following ASIC’s announcement.
PwC Australia and EY Australia indicated they would cooperate fully with the regulator’s review.
Deloitte Australia chose not to comment publicly.
KPMG Australia did not immediately respond and continues to face a separate ASIC investigation concerning allegations involving confidential information.
While ASIC’s broader review applies across all four firms, the specific investigation into the alleged misuse of confidential information currently remains limited to KPMG.
Wider Implications for the Profession
The expanded review demonstrates that Australian regulators are looking beyond isolated incidents and are assessing whether broader improvements are needed across the audit profession.
Any legislative reforms resulting from the current consultation could significantly alter how Australia’s largest accounting firms are supervised, with potential implications for governance standards, auditor independence, compliance frameworks and public trust.
The developments also align with an international trend of regulators increasing scrutiny of audit firms following a series of high-profile governance and ethics issues in several jurisdictions.
Key Takeaways
- ASIC has extended its audit conduct review to all four Big Four firms in Australia.
- The review focuses on internal complaints and whistleblower reports relating to audit practices.
- A separate enforcement investigation into KPMG remains ongoing.
- The Australian Government is considering reforms that would strengthen oversight of major accounting and consulting firms.
- The outcome of the consultation could reshape the regulatory framework governing Australia’s professional services sector.