|Australian companies may be forced to put their audit work up for tender, or explain to investors why they won’t open up the role to other providers, as MPs push ahead with proposals designed to disrupt the cosy relationship that can develop between company directors and their long-time auditors.|
The proposed changes follow from bipartisan concerns, raised by the Joint Committee on Corporations and Financial Services, regarding the quality of audit work in Australia.
The Committee held four days of hearings and received more than 100 submissions with general agreement from firms, the corporate regulator, and experts all concluding that the current state in audit was not serving the users of financial information adequately.
The Committee’s inquiry focused on the Big Four firms – Deloitte, EY, KPMG, and PwC. The Australian Securities & Investments Commission found that the Big Four had failed to obtain sufficient assurance in up to 32% of the audit areas examined.
Average tenure of audit firms at the nation’s 20 largest companies is more than two decades. ANZ Bank, for instance, has retained KPMG as its auditor for more than 50 years, while Westpac has worked with PwC for nearly 20 years.