The three professional accounting bodies, CPA Australia, the Institute of Chartered Accountants Australia (ICAA) and the National Institute of Accountants (NIA) are doing a good job of facilitating auditor independence according to a report released today by the Financial Reporting Council (FRC).  
 
The review of auditor independence was conducted by a team of consultants on behalf of the FRC and their recommendations to the FRC are expected to provide direction to the Council's 2006/07 work plan.  
 
While welcoming the report, the three accounting bodies were cautious about the potential for some of the recommendations, made in the consultants' report, to add significant layers of regulation to an environment already subject to extensive public and regulatory scrutiny.  
 
CPA Australia Chief Executive Geoff Rankin said the consultants who conducted the review seemed intent on recommending the FRC explore the feasibility of a UK-style oversight framework.  
 
"As the existing Australian audit oversight and discipline model has been found satisfactory, and there has been little evaluation of alternatives, the suggestion of adopting the audit oversight and disciplinary model used in the UK is presently unsubstantiated," Mr Rankin said.  
 
ICAA Chief Executive, Graham Meyer queried the report's recommendation for the accounting bodies to introduce an audit practising certificate when ASIC has responsibility for the registration of company auditors.  
 
"The justification provided in the consultants' report for the introduction of such an audit certificate does not adequately acknowledge the importance of the annual Continuing Professional Education requirements in the audit area.  
 
"Introducing additional compliance burdens in the audit specialisation will likely decrease the number of accountants willing to take on audits. Additional compliance requirements would lead to further concentration amongst firms, making compliance with audit rotation more challenging," Mr Meyer said.  
 
NIA Chief Executive, Roger Cotton said, "It was pleasing the report acknowledged that the professional bodies have a strong and well-established ethics structure in place but this makes the consultants' recommendation to mandate ethics as an additional component of continuing professional development a little puzzling. The recommendation fails to recognise the development needs of individuals and appears to be mandated as a catch-all for everyone in the profession not just auditors."  
 
"The FRC will need some time to consider the recommendations made in the report and on behalf of our members, CPA Australia, ICAA and NIA are committed to working with the FRC to improve the effectiveness of the Australian regulatory model," Mr Cotton said.  
 
The three bodies agreed they are looking forward to consulting with the FRC before the Council comes to a conclusion on the Auditor Independence report's recommendations.