On Tuesday (21 November), the government announced plans to restructure Australia’s financial reporting bodies to make them “more efficient, effective and fit for purpose”.
Treasurer Jim Chalmers said the merger would assist Australia in implementing new climate and sustainability standards.
He said the three bodies currently overseeing financial reporting and setting reporting standards will be combined into a single entity.
“In addition to accounting and auditing standards, this new integrated body will better support the ongoing implementation of climate‑related financial disclosure standards in Australia,” he said in a statement.
“It is intended that the body will be operational on or after 1 July 2026, subject to the passage of legislation.”
Mr Chalmers said businesses, investors and other stakeholders will benefit from engaging with a single entity, helping to increase regulatory consistency, reduce red tape and unnecessary costs and avoid duplication.
Shelley Banton, head of education for ASF Audits, said the announcement had blindsided the industry as there was no reference to any merger between the AUASB, the AASB and the FRC during the Superannuation Financial Reporting and Audit consultation process.
“The draft regulations primarily apply to RSEs (APRA funds) to improve compliance and transparency in the super industry,” she said.
“Any reference to SMSFs was minimal and didn’t impact the operation of fund information to be prepared for SMSFs which can be referred to items 18 and 20 in the draft regulations.”
Ms Banton said without any further context, the audit industry doesn’t know how this new single entity will work.
“We also don’t know how it will be resourced, what sort of powers it will have and what the impact will be on the sector,” she said.
“As such, it is impossible to comment on streamlining the financial reporting structure, especially around auditing and how it may affect SMSFs. It is unusual for the government to announce such unprecedented reform without prior consultation.
CA ANZ’s group executive advocacy and international development, Simon Grant, said while there may be sound intentions behind the plan, the government has not consulted broadly enough.
“While it is good to see concerted efforts and focus on implementing important climate and sustainability standards – something we have consistently shown a willingness to work with the government on – we are disappointed the announcement was made without effective professional, industry and capital markets consultation,” said Mr Grant.
Mr Grant said he is concerned by the lack of detail around important issues such as adequate funding and ensuring Australia’s alignment to international accounting, audit and sustainability standards setters.
“CA ANZ and many other stakeholders have urged the government to establish a focused sustainability standards board to have the right expertise and international alignment from the outset,” he said.
“This announcement is the largest reform to the accounting and audit standard-setting bodies in decades and yet it was revealed via a speech in a public forum.”
SMSFA CEO Peter Burgess said he doesn’t expect the proposed merger of the entities to have an immediate impact on the audit of SMSFs.
“Transitional arrangements will be needed to grandfather existing audit standards and guidance publications,” he said.
“As a Commonwealth entity, consultation and engagement on proposed changes to the audit standards and related publications would still be required. We look forward to reviewing the proposal in more detail when Government releases further details to industry and stakeholders for consultation.”
The government will finalise the details of the governance arrangements for the new entity and will release draft legislation for public consultation, including appropriate transitional arrangements.
