An address by Berna Collier, Commissioner, ASIC, 20 May 2003.
Introduction
The Australian Securities and Investments Commission is mandated to promote the confident and informed participation of investors and consumers in the financial system. A vital element in achieving this objective is ASIC's focus on the quality of published financial reports and on the audit process.
The accounting profession has been the subject of intense scrutiny in the past eighteen months. In the context of community, government and media scrutiny of corporate governance standards, in some cases crossing international borders, auditors in particular have felt the heat.
ASIC has been active in reviewing conduct, enforcing laws and standards where appropriate, and contributing to the debate surrounding financial reporting and accounting standards. This debate has seen outcomes, not only in the HIH Royal Commission Report of Justice Neville Owen, but also in the CLERP 9 Discussion Paper and proposed CLERP 9 legislation which is due for release in draft form shortly.
My topic today is 'Policing acceptable standards of auditing and accounting practices'. In seeking to address this topic I propose to divide my paper into three parts.
The first part of my presentation will focus on ASIC's current activities in regulating financial reporting and audit under the current provisions of the Corporations Act. In that respect I will discuss:
- the ASIC Accounting Surveillance Programme and outcomes from the most recent study
- possible avenues for surveillance in the next financial year
- CALDB referrals.
Second, I will spend a little time looking at current ASIC initiatives which, while arguably are not strictly 'policing' as such, nonetheless relate to proposed ASIC guidance in the context of accounting and auditing standards, and are relevant to what ASIC considers to be 'acceptable'. Issues on which I plan to touch are:
- recent ASIC initiatives in relation to options granted as remuneration
- deficiencies of defined benefit superannuation funds.
Third, given ASIC's continuing role and interest in broader accounting issues there are a number of developments currently on the horizon which I would like to touch upon during the course of the next hour. These developments are:
- the imminent release of CLERP 9 draft legislation
- ASIC's proposal to establish a Financial Reporting Panel to consider compliance in financial reports with the accounting standards and the true and fair view requirement
- the CLERP 9 proposal to give legal backing to auditing standards
- proposals relevant to the adoption of International Accounting Standards in Australia in 2005.