Treasury must consider all the recommendations of two recent parliamentary inquiries before it takes action to regulate the Big 4 consulting firms according to Greens Finance and Public Service spokesperson Barbara Pocock.
The two inquiries made 52 recommendations between them which were agreed by Labor, the Liberals and the Greens giving the government a green light for root and branch reform across the accounting and consulting sector.
As stated by Senator Barbara Pocock:
"The question this government has to answer is 'Can the Big 4 be trusted to govern themselves?' and let me tell you, after sitting on two parliamentary inquiries brought on by massive governance and ethical failures at PwC, the answer is emphatically no.
"We've yet to see the detail of Treasury's proposals but we have put a raft of recommendations on the table aimed at regulating the big accounting and consulting firms. These firms look and act like multinational corporations but they hide behind unaccountable partnership structures avoiding the scrutiny of our corporate watchdog.
"One key recommendation I made urged the government to reduce the cap on partner numbers from 1000 down to 100 partners. This number recognises the workable size of a genuine partnership and would force firms with more than 100 partners to incorporate under ASIC. It was also recommended that corporate reporting requirements be extended to cover partnerships as well as corporations.
"For those not paying attention, we have an audit crisis in this country with up to 60% of audits reviewed by ASIC in 2022, called into question. Deloitte and KPMG suffered a drastic decline in audit quality that year with the regulator calling for concerted action from both firms to lift their game.
"This is a sector that is not performing well and our business community is not being well served by the current regulatory regime. I look forward to seeing the detail of Treasury's proposals and I urge the government to consider the all the recommendations of both recent parliamentary inquiries into this sector."
