EY, KPMG chief executives back a tougher, single watchdog for firms
Leaders at Deloitte, EY and KPMG will call for fragmented regulation of the sector to be replaced by a single set of standards as part of a Treasury review into their firms they hope will restore public trust in the sector.
The big four consulting firms face a new Treasury review into regulation in their sector. AFR
The two-year review – one of eight announced on Sunday as part a sweeping crackdown on tax adviser misconduct in response to the PwC tax leaks scandal – will examine the regulation of the major accounting and consulting firms “to consider whether reforms are needed”.
The review will likely focus on whether the partnership models of the big four firms are appropriate given the size of their partnerships and the importance of their auditing function to the capital markets. There has been no suggestion that the review will put limits on the firms’ consulting businesses.
An ongoing Senate inquiry into consulting has already highlighted how the firms are subject to dozens of overlapping regulations, how their partnership models limit their reporting requirements and may also impede executive accountability because the partners are owners of the business as opposed to employees.
The inquiry also highlighted the fragmented nature of their regulation and weaknesses in the self-regulation model. The firms are answerable to dozens of regulators and organisations that police different aspects of their operations, while professional body Chartered Accountants ANZ has been criticised for its tardiness, and weak penalties, in dealing with high-profile misconduct matters.
Material obtained via the consulting inquiry and the upcoming joint inquiry into the structural challenges of the accounting and consultancy sector will
Read more on afr.com
