The Australian Department of the Treasury has published an options paper seeking feedback on reforms to the regulation of accounting, auditing and consulting firms, with the main focus on lifting audit quality, independence and accountability. Treasury says feedback from earlier consultation and more recent events points to regulatory gaps around auditor independence and ethics, firm culture, firm-wide monitoring and internal controls, and the prioritisation of audit quality. The paper sets out options for government consideration rather than settled policy. The proposals are grouped across six areas. On accountability, Treasury outlines options to require reporting entities to obtain audits only from firms licensed by the Australian Securities and Investments Commission, with ongoing quality management, ethical and governance obligations, to impose ongoing professional conduct obligations on registered company auditors, and to apply fit and proper requirements to all partners in multidisciplinary firms. On structural conflicts, options range from banning audit firms from providing non-audit services to audit clients, to operational separation of audit practices, to full structural separation of audit and non-audit businesses. The paper also proposes new governance requirements for large audit firms, possible limits on accounting partnerships or a requirement that audits be provided through authorised audit companies, more frequent ASIC audit reviews with published findings, civil penalties and stronger administrative and disciplinary powers, and measures to increase market dynamism through disclosure of auditor tenure, mandatory tendering every 10 years and possible audit firm rotation after 20 years. Consultation closes on 12 August 2026. Treasury states the options have not received government approval and are intended to inform further advice to the government on future audit regulation.
Department of Treasury (Australia)2026-07-01
Australian Department of the Treasury launches options paper on tighter audit firm regulation including ASIC licensing and non-audit service curbs
The Australian Department of the Treasury has issued an options paper on tighter regulation of accounting, auditing and consulting firms, centered on audit quality, independence and firm accountability. The options include ASIC licensing for audit firms, stronger ethical and quality obligations, civil penalties and enhanced surveillance, restrictions on non-audit services, and mandatory auditor tendering or rotation. Feedback closes on 12 August 2026.