Australia to boost scrutiny of Big Four accounting firms after wave of scandals

By Christine Chen SYDNEY, July 16 (Reuters) - Australia on Thursday announced plans to increase its oversight of the Big Four accounting firms after a series...

By Christine Chen SYDNEY, July 16 (Reuters) - Australia on Thursday announced plans to increase its oversight of the Big Four accounting firms after a series of high-profile governance failures in the industry, most recently by KPMG whose staff have been accused of misusing confidential information to win contracts. The government said it had directed the Australian Securities and Investments Commission (ASIC) to improve the regulation of accounting and auditing firms, "enhancing the accountability, transparency and oversight of the audit sector." The government's statement did not provide details on what kind of new regulatory steps might be forthcoming, but earlier this month, it proposed bringing the firms under the regulator's purview and providing it with more powers and stronger penalties to crack down on misconduct.

ASIC also said this month it would examine whistleblower complaints about audit conduct throughout the sector, while continuing a separate investigation into specific allegations involving KPMG. The government has also said that breaking up the Big Four firms is one option under consideration. All of the Big Four firms have suffered scandals in Australia in recent years.

In addition to the KPMG scandal, two EY employees were sacked in June after allegedly accessing the personal banking details of the prime minister. In 2023, PwC was rocked by revelations it shared confidential tax policy details to win clients. Last year, Deloitte apologised after academics found a report the firm prepared for a government department contained AI-generated fabrications.

ASIC was also instructed to enforce high standards in Australia's pension system, to take action to deter corporate greenwashing and ensure financial market infrastructure is effective. (Reporting by Christine Chen in Sydney; Editing by Edwina Gibbs)