European Union audit regulators can now enter into cooperative arrangements with ASIC regarding the supervision of any Australian audit firms that audit entities listed on EU regulated exchanges.
This move follows a decision by the European Commission to recognise that Australia's systems for overseeing auditors, including our audit firm inspection arrangements, investigations and penalties are comparable to those in the European Union.
The European Commission decision means that EU audit regulators will be able to rely on ASIC audit firm inspections rather than carrying out their own inspections of Australian audit firms that audit Australian companies listed in Europe or Australian subsidiaries of European companies.
ASIC Commissioner, Michael Dwyer, said ‘This eliminates potentially unnecessary duplication of effort and reduces the regulatory burden on Australian auditors’.
In making its decision, the European Commission commented on the need for extensive international cooperation between audit regulators, given the global reach of corporations and their auditors
Mr Dwyer said ‘The European Commission’s decision follows comprehensive submissions made by ASIC to achieve a more efficient regulatory oversight of Australian audit firms’.
At the date of this release Australia is one of the first 10 jurisdictions whose systems for auditor oversight have been assessed by the European Commission to be equivalent to those operating in the EU.
Another decision by the European Commission in late 2010 facilitates the sharing with ASIC of auditor working papers relating to individual entities by EU audit regulators.
Background
ASIC conducts regular inspections of Australian audit firms focusing on quality control systems, auditor independence and, through reviews of audit working paper files for individual entities, audit quality.
ASIC issues private reports of its findings to each firm inspected. ASIC also issues aggregate public reports that don’t identify the individual firms to which particular findings relate. The public reports are intended to inform all firms about ASIC’s findings and future focus areas, including those firms not inspected during the period. ASIC’s last public report was issued in March 2010.