Former ACCC chairman Graeme Samuel says the big four’s governance changes looked good on paper, but would not fundamentally change the culture of the firms.
Already a subscriber?Former competition chief Graeme Samuel says the corporate watchdog should take over the regulation of large partnerships from the states to prevent conflicts of interest and halt unenforceable self-regulation., Treasury said the big four accounting and consulting firms had become so large they were unable to properly regulate themselves, and efforts by the firms to introduce corporate-style governance standards were unlikely to deliver substantive improvements.
Instead, state governments should hand over to the federal government their powers to regulate partnerships of economic significance, similar to what was done with consumer laws in the mid-1990s, to allow the big four to be brought under the aegis of the Australian Securities and Investments Commission, he toldThe corporate regulator could prevent the big firms undertaking non-audit work for audit clients, Professor Samuel said, avoiding a complex restructuring of the firms.
Under the sector’s complicated, self-imposed rules, firms are allowed to provide certain types of non-audit services, under certain conditions, to auditing clients. This can include the auditing firm providing tax advice.
“To the extent that such a partnership has appointed independent directors to its board, directors’ influence may be limited if they are in the minority.”
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