04-319 ASIC details auditor independence surveillance
Thursday 30 September 2004
The Australian Securities and Investments Commission (ASIC) today announced that the first round of surveillance to regulate compliance with the CLERP 9 audit independence requirements will commence in the last quarter of this calendar year.
CLERP 9 introduced into the Corporations Act more extensive and specific requirements for auditors in terms of independence, as well as a general auditor independence requirement.
‘Independence is the cornerstone of the auditing profession and ASIC will be conducting on-site visits to review the systems and processes that audit firms have in place to ensure compliance with the independence requirements under the Corporations Act’, said Mr Greg Pound, ASIC’s Chief Accountant.
In the first year, ASIC will review the ‘Big 4’ accounting firms, selected mid-tier firms, and any other firms where evidence of systemic independence issues arise during the course of its financial reporting surveillance program.
‘We have chosen audit firms that have a significant number of listed company clients for the first year. This will help us form a view about the general level of compliance by auditors of the majority of listed companies’, Mr Pound said.
‘In the second year, we will expand the program to cover audit firms with a smaller number of listed company clients, and over time we will cover all audit firms on a systematic basis’, he said.
ASIC may also target any specific independence issues of concern that are identified in the market.
‘Our role is to enforce the legislative requirements designed to prevent potential audit independence issues. Audit independence requires that an auditor be independent in fact and also to be perceived as independent. To the extent that readers of a financial report and associated auditor’s report believe that there is a lack of audit independence, the usefulness of the audit function in adding credibility to the financial report is impaired’, Mr Pound said.
Under the Memorandum of Understanding signed with the Financial Reporting Council (FRC) in June, ASIC will provide broad level findings and any systemic issues identified from its surveillance to the FRC to assist its oversight of the auditor independence arrangements in Australia.
ASIC Website: Printed 03/12/2010
