3. Disciplinary procedures of the professional accounting bodies
Subparagraph 225(2B)(a)(v) of the ASIC Act requires the FRC to monitor and assess the nature and overall adequacy of the investigation and disciplinary procedures of the professional accounting bodies as those procedures apply to Australian auditors.
In its 2004-05 independence report, the FRC noted that there are many entities potentially involved in the disciplinary process, including the accounting bodies, ASIC and the CALDB, but because they all act independently there are situations of potential overlap and underlap. The FRC indicated that it is uncomfortable with the present disciplinary framework and that, in its opinion, there is significant room for improvement and strengthening of disciplinary procedures.
In these circumstances, the FRC indicated that it would be reviewing the disciplinary framework in detail in 2005-06.
In April 2006, the Treasury, in consultation with the FRC, engaged Mr William J Bartlett to examine the disciplinary procedures of the professional accounting bodies. The key requirements of the statement of work for this task, which Mr Bartlett undertook in association with Ms Anne Dalton of legal firm Sparke Helmore, are set out in Appendix D of this report.
The examination of the disciplinary procedures of the professional accounting bodies indicated that the procedures of each body are adequate. However, the consultant has identified a number of threshold issues concerning the purpose and role of the professional bodies in disciplining auditors, their relationship in this area with ASIC and the CALDB, and the CALDB’s ability to initiate disciplinary actions in the public interest.
The consultant made a number of findings and recommendations in respect of the matters examined by him during the course of his consultancy and these are summarised in Appendix D.
The FRC intends to examine the findings and recommendations of the consultant as part of its 2006-07 work programme, including consultations with the professional accounting bodies and other stakeholders.