The inquiry into the big four audit firms, triggered due to a scandal involving National Australia Bank (NAB) and EY, was due to start in late 2019 which ICMA said was ‘welcome and long overdue’.
The Parliamentary Joint Committee on Corporations and Financial Services said it would look at audit quality and competition related to KPMG, Deloitte, PwC and EY and report back by late March 2020.
The EY/NAB scandal involved outgoing NAB chairman Ken Henry stating to EY in 2018 that it was selling products that were ripping off its customers and would eventually require compensation. Between 2008 and 2018, EY earnt $286 million from NAB with the big four auditors.
ICMA said there was a need for external auditors to be held to account in the same way as other professions.
Professor Janek Ratnatunga, chief executive of ICMA Australia, said: “External audits should act as trust mechanisms that assure the public that capitalist corporations and management are not corrupt and that companies and their directors are accountable. But audit is also big business.
He said accounting standards auditors adhere to were set by auditors themselves and the International Accounting Standards Board which presented a conflict of interest.
“It is time for an independent body, such as Parliament, to be responsible for setting accounting standards.”
