Australia’s corporate regulator has announced tougher oversight of the country’s auditors following the KPMG leak scandal, warning that it will pursue stronger legal and disciplinary action where misconduct is identified.
The Australian Securities and Investments Commission (ASIC) said on Wednesday that it had written to approximately 2,900 registered company auditors outlining a strengthened regulatory approach aimed at reinforcing compliance with legal, professional and ethical standards.
In the letter, ASIC Commissioner Kate O’Rourke said the regulator was concerned about issues involving auditors who had failed to comply with requirements to act independently and ethically. She said the regulator would increase its focus on identifying misconduct and would take more matters to court or pursue disciplinary proceedings where appropriate.
“As the regulator of registered company auditors, ASIC is concerned about issues that have been raised about auditors who have not complied with the law and professional and ethical standards to act independently and ethically,” O’Rourke wrote.
ASIC said it would also intensify scrutiny of conflicts of interest involving auditors and the companies they examine, particularly in situations where personal relationships could undermine the independence of an audit.
Under Australia’s regulatory framework, ASIC oversees individual registered company auditors but does not have the authority to regulate audit firms directly because they operate as partnerships. Despite that limitation, the regulator said it would strengthen its oversight of individual auditors to improve compliance and accountability across the profession.
The announcement follows the KPMG leak scandal and signals a more aggressive enforcement approach by ASIC, with the regulator indicating that auditors found to have breached legal or professional obligations should expect increased regulatory action.
