Key facts
- Australia's corporate regulator, ASIC, will increase its oversight of auditors.
- The move follows a scandal involving KPMG.
- ASIC will escalate legal action against auditors found to have engaged in misconduct.
- The regulator will focus on conflicts of interest and auditor independence.
- ASIC oversees individual auditors, not auditing firms directly.
Australia's corporate regulator, the Australian Securities and Investments Commission (ASIC), announced it will increase its regulatory oversight of auditors in the wake of a scandal involving KPMG. ASIC Commissioner Kate O'Rourke stated in a letter to approximately 2,900 auditors that the regulator is concerned about auditors not complying with legal and ethical standards, particularly regarding independence.
ASIC plans to escalate legal and disciplinary actions against auditors where misconduct is identified. The regulator will also increase its focus on situations involving conflicts of interest and potential compromises to auditor independence, especially concerning personal relationships between auditors and the firms they audit.
While ASIC does not directly regulate auditing firms, which are structured as partnerships, it does oversee the individual employees within these practices. The increased scrutiny aims to ensure auditors adhere to professional and ethical standards.