Financial Reporting Council
Report on Auditor Independence
2006-07
© Commonwealth of Australia 2007
ISBN 0 642 74429 7
This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth available from the Department of Communications, Information Technology and the Arts. Requests and inquiries concerning reproduction and rights should be addressed to:
The Commonwealth Copyright Administration
Copyright Law Branch
Attorney-General’s Department
Robert Garran Offices
National Circuit
BARTON ACT 2600
Further information on Commonwealth copyright policy is available via the web site of the Attorney-General’s Department at
Printed by CanPrint Communications Pty Ltd
Chairman: Telephone: Email: |
Secretariat: Telephone: Facsimile: E-mail: |
5 December 2007
The Hon Wayne Swan MP
Treasurer
Parliament House
CANBERRA ACT 2600
Dear Treasurer
I have pleasure in presenting the report of the Financial Reporting Council (FRC) on the performance of its auditor independence functions for the year ended 30 June 2007.
This is the third report prepared by the FRC in accordance with section 235BA of the Australian Securities and Investments Commission Act 2001 (ASIC Act).
Subsection 235BA(1) of the ASIC Act requires the FRC, by 31 October each year, to prepare a report on its performance of its auditor independence functions, the findings and conclusions reached by the FRC in performing those functions, and the actions (if any) taken by the FRC in respect of those findings and conclusions. On 31 October 2007, the then Parliamentary Secretary to the Treasurer agreed, pursuant to subsection 235BA(2) of the ASIC Act, to an extension of time for the preparation of this report.
Under subsection 235BA(3) of the ASIC Act, the report must be tabled in each House of the Parliament as soon as practicable.
Yours sincerely
SIGNED
Charles Macek
Abbreviations
The following abbreviations are used throughout this report:
- APESB
- Accounting Professional and Ethical Standards Board
- APRA
- Australian Prudtntial Regulation Authority
- AQRB
- Audit Quality Review Board
- ASIC
- Australian Securities and Investments Commission
- ASIC Act
- Australian Securities and Investments Commission Act 2001
- ASX
- Australian Securities Exchange Ltd
- ASXMS
- ASX Markets Supervision Pty Ltd
- ATO
- Australian Taxation Office
- CALDB
- Companies Auditors and Liquidators Disciplinary Board
- CLERP
- Corporate Law Economic Reform Programme
- CLERP 9 Act
- Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004
- Corporations Act
- Corporations Act 2001
- CPA
- CPA Australia
- CPE
- Continuing Professional Education
- CPP
- Certificate of Public Practice
- EU
- European Union
- FRC
- Financial Reporting Council
- ICAA
- The Institute of Chartered Accountants in Australia
- IFAC
- International Fedtration of Accountants
- IFIAR
- International Forum of Indtpendtnt Audit Regulators
- IOSCO
- International Organization of Securities Commissions
- MOU
- Memorandum of Undtrstanding
- MOU bodies
- APRA, ASIC, ASX, CPA, ICAA and NIA
- NIA
- National Institute of Accountants
- PCAOB
- Public Company Accounting Oversight Board (United States)
- PPC
- Public Practice Certificate
- RCAs
- Registered company auditors
- SEC
- Securities and Exchange Commission (United States)
- SMSF
- Self-Managed Superannuation Fund
- UK
- United Kingdom
- US
- United States of America
Australian auditors, auditors, individual auditors, audit firms and audit companies
The ASIC and Corporations Acts use a number of terms to describe the individuals, firms and companies that may be appointed as auditor for a company or a registered scheme under Part 2M.4 of the Corporations Act.
The expression ‘Australian auditor’, which is used in Part 12 of the ASIC Act for setting the scope of the FRC’s auditor independence function, is defined in section 5 of that Act to mean an individual auditor, an audit firm or an audit company.
In the Corporations Act, the terms ‘individual auditor’, ‘audit firm’ and ‘audit company’ are used to describe the manner in which the requirements of the Act apply to the different structures under which an audit practice may be conducted: sole trader, partnership and company.
For purposes of consistency and to simplify drafting, this report uses the expression audit firm to refer to all three structures.