Australia plans stricter controls on auditors
Oct 5, 2001
The Australian government is considering banning auditors from
joining the boards of companies they have audited within the
previous two years as part of efforts to ensure their independence.
The move - which would bring local regulation closer to new
requirements for auditors in the US - follows a string of recent
high-profile corporate collapses in Australia, notably the failure
of HIH, amid allegations that auditors should have been more
rigorous before signing off on the companies' accounts.
Until late last year three of HIH's directors were former partners
at Arthur Andersen, the company's auditor. HIH, once one of
Australia's biggest insurers, collapsed earlier this year with debts
of more than A$4bn ($2bn), becoming the country's biggest corporate
Joe Hockey, minister for financial services andregulation, said on
Thursday the government would consider implementing the
recommendations of a report that found Australia needed to take more
steps to ensure that auditors were independent.
Mr Hockey commissioned the report, by a leading academic, following
the collapses of HIH and One.Tel, the discount telecoms company.
The report, published on Thursday, said that as well as the ban on
auditors joining company boards for two years, the government should
prevent close relatives of company directors from auditing that
It also recommended that auditors be required to disclose the value
of other non-audit work done for a company and that stock exchange
rules be changed to force all listed companies to have an audit
The Institute of Chartered Accountants in Australia supported the
report's main recommendations although it said the problem of
auditors accepting directorships was not as great as imagined.
"HIH is the first case where this has been highlighted," said
Stephen Harrison, ICAA chief executive. "But no evidence has yet
been presented to suggest that [the presence of former Andersen
partners on the board] compromised Andersen's independence."
The opposition Labor party has been pushing for more stringent
regulation of auditors for some time, saying Australia should adopt
the new requirements recently introduced in the US and being
considered in the European Union.
About Us | Statistics | New Laws/Regs
Library | Facts | Opeds and Speeches | Links | Contact Us