Australian Regulator Seeks International Cooperation

by Mary Swire, for LawAndTax-News.com, Hong Kong

14 February 2007

The Australian Senate has passed a bill that will enhance cooperation between the national financial markets regulator, the Australian Securities and Investments Commission (ASIC), and foreign regulatory agencies.

"This Bill is an important milestone in furthering international cooperation between regulators,” explained Chris Pearce, Parliamentary Secretary. "It will empower the Australian Securities and Investments Commission, with the consent of the Minister, to enter into cooperative audit arrangements with foreign regulatory bodies."

As a result of the Australian Securities and Investments Amendment (Audit Inspection) Bill 2006, ASIC will be able to enter into a cooperative audit arrangement with the US Public Company Accounting Oversight Board (PCAOB).

"The Government welcomes closer cooperation between Australian and US regulators because of the significant number of major Australian companies and audit firms that are subject to both the Australian and US corporate regulatory systems,” Mr Pearce said, adding that:

"The proposed joint inspection arrangement between ASIC and the PCAOB will streamline the information-gathering process. This will produce significant cost savings for audit firms as they will need to only accommodate one joint inspection, rather than two separate inspections by ASIC and the PCAOB.”

The bill will also enhance ASIC’s domestic and international audit inspection powers. "These measures are also designed to reduce compliance costs and they will clarify the scope of ASIC’s existing power to review audit firms,” Pearce stated.

"The Government has struck the right balance between ASIC’s statutory responsibilities and protecting the interests of audit firms and their clients by implementing a number of legislative and non-legislative safeguards," he went on to observe.

Pearce also confirmed that the Government intends to review the operation of the cooperative arrangement between ASIC and the PCAOB. The review will take place after the first round of triennial PCAOB inspections in Australia has been completed, and will assess whether the joint inspection process has met expectations. This in line with the Government’s response to the Rethinking Regulation Taskforce Report.

The Bill also contains a technical amendment to a transitional provision relating to auditing standards made by the professional accounting bodies, bringing the period of immunity against criminal liability applying to the standards into line with the extended life of the standards.

"The legislation has benefited from constructive input from stakeholders, including the major audit firms, during the consultative process,” Pearce announced. "I would like to thank them for their valuable contribution to shaping the legislation.”

"I am also pleased that the extensive consultative process has ensured that all key stakeholders support the measures in the Bill," he noted.

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