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The accounting body says sweeping reforms in response to big four firms’ misconduct will burden smaller practitioners who already deal with a raft of different regimes.
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Big 4 crusade could hurt high street accountants: CPA Australia
04 July 2024
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Rules introduced to regulate the big four firms must be proportionate and not burden "high street" practitioners who already contend with a raft of different regimes, CPA Australia says.
A recent Treasury consultation paper floated reforms to the accounting and auditing sector, including splitting off audit services, on top of existing tax adviser reforms that introduced new reporting obligations and fines.
Ram Subramanian, CPA Australia’s interim head of policy and advocacy, said any new regulations to curb misconduct at the top end of town would also affect smaller practitioners who used similar structures.
“The accounting profession covers the largest firms through to high street practitioners who provide a wide range of services including tax, audit and financial advice,” he said.
“Therefore regulatory changes must consider the impacts across the entire profession.”
CPA Australia’s members were already “frustrated” about contending with multiple regimes and holding various registrations and licenses to remain compliant, the accounting body said in its Treasury submission this week.
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“There is a risk that a statutory response to concerns arising from the misconduct of practitioners in very large firms may create unnecessarily complex, expensive and time-consuming obligations for these smaller practitioners,” it said.
“A professional accountant in a smaller practice will often provide services that include tax, financial planning, SMSF audit and consulting/business advice. The practitioner and/or their practice will hold multiple statutory registrations and be subject to different codes of conduct and compliance requirements enforced by different government agencies.”
More red tape could exacerbate the accountant shortage by deterring new entrants, it said.
“Being a professional accountant should not be a barrier to a career nor an excessive cost for practitioners.”
Its submission also criticised the government’s “narrow view” of auditing, focusing on regulating corporate audits but overlooking the impact on audits of SMSFs and not-for-profits.
“Much of the discussion focuses on the largest accounting firms, however, the professional accounting services industry is much broader and deeper,” it said.
“The potential impacts of reforms should be considered holistically across the profession, especially its impact on small to medium-sized practitioners, to ensure that regulation is proportionate, effective and efficient.”
“Similarly, while the consultation paper focuses on the audit of corporate entities, we recommend that broader consideration is given to the range of statutory and non-statutory audits.”
In 2019, the government held a parliamentary inquiry into auditing, focusing on the quality of work produced by the big four. It recommended changes to improve ASIC’s inspections and reporting, audit tendering every 10 years and digital financial reporting to become standard practice.
Subsequent inquiries triggered by the PwC tax leaks scandal raised further concerns about conflicts of interest in the big four’s audit and consulting divisions.
CPA Australia said accounting and audit practitioners “effectively managed” conflicts of interest through existing laws, codes of conduct and membership to professional bodies. It also pushed back against separating audit and non-audit services.
“We do not support separating the provision of audit and non-audit services by multi-disciplinary firms,” it said.
“Any regulatory changes that seek to divest audit and assurance services from multi-disciplinary firms will therefore have far-reaching impacts that will affect accounting firms of all sizes.”
Subramanian said: “Auditors are highly regulated practitioners and the current laws, regulations and professional and ethical standards are designed to effectively manage any conflicts of interest and maintain auditor independence and objectivity.”
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