Australia announced Thursday that it is stepping up oversight of the country’s four biggest accounting firms, responding to a string of serious governance failures that have shaken the industry.
The government directed the Australian Securities and Investments Commission, known as ASIC, to strengthen how it regulates accounting and auditing firms. Officials described the move as a way of “enhancing the accountability, transparency and oversight of the audit sector.”
While Thursday’s announcement stopped short of spelling out specific new rules, the government earlier this month put forward a proposal to formally bring the major firms under ASIC’s authority and arm the regulator with expanded powers and tougher penalties for misconduct.
ASIC separately announced this month that it would look into whistleblower complaints about auditing practices across the entire industry, while also pressing forward with a distinct investigation into allegations specifically targeting KPMG, whose employees stand accused of misusing confidential information to secure contracts.
The government has also floated the possibility of breaking up the Big Four firms altogether as one potential course of action.
Each of the four major firms has been caught up in its own controversy in Australia in recent years. Beyond the KPMG situation, two employees at EY were fired in June after allegedly accessing the private banking information of the country’s prime minister.
In 2023, PwC faced a major crisis after it emerged that the firm had shared confidential government tax policy details with clients to gain a competitive edge. More recently, Deloitte was forced to apologize after researchers discovered that a report it had produced for a government agency contained fabricated content generated by artificial intelligence.
In addition to the accounting sector crackdown, ASIC was also directed to uphold high standards within Australia’s pension system, take steps to combat corporate greenwashing, and ensure that the country’s financial market infrastructure is functioning properly.
