Treasury is reviewing how the largest accounting partnerships operate after a major tax leaks scandal put their governance, culture and conflicts of interest under the microscope. The consultation, which wrapped up in mid‑2024, drew 36 written submissions and 16 private forums from regulators, professional bodies, academics and firms themselves. Their feedback, summarised in a ministerial brief released under Freedom of Information laws, points to long‑running concerns that these partnerships sit in a “grey zone” between existing laws, professional standards and regulatory oversight.
Respondents say the current system focuses heavily on individual registered auditors, even though key decisions about audit quality, independence and staffing are made at the partnership level. Regulators reportedly struggle to take meaningful action against whole firms when misconduct arises from culture or governance, not just one partner’s behaviour. This is compounded by fragmented oversight, with one corporate regulator covering only a slice of big four services while other activities fall under tax authorities, practitioner boards and professional associations that see themselves as supporting, not leading, enforcement. Many stakeholders also view Australia’s audit inspections and penalties as weaker than those used in larger overseas markets.
The submissions show clear divides within the industry. The big four and several other large networks back stronger governance rules and more public disclosure, yet they argue existing compliance settings work and want to preserve self‑regulation on issues such as providing non‑audit services to audit clients. Mid‑tier and smaller firms push back on any extra governance or compliance burden, warning that current requirements already drive up costs and make it harder to compete for smaller audits. Regulators and standards bodies, however, argue that focusing penalties on individuals has not delivered firm‑wide accountability and they favour the idea of direct powers to sanction partnerships themselves. There is less consensus on forcing structural separation of audit and consulting, though many agree whistleblower protections should clearly cover partnership structures.
All of this points towards a potential tightening of Australia’s audit and consulting framework, but the shape of any reform still looks uncertain. The federal government has already moved on procurement rules, tax adviser penalties and advisory bodies, yet it has delayed decisions on contentious ideas such as capping partner numbers at the largest firms or imposing new partnership rules. Treasury has not released most submissions or any detailed policy options almost two years on, and key details of its internal response remain redacted. It seems the next steps will hinge on how far policymakers are willing to go in turning broad support for firm‑level accountability into concrete laws without undermining the capacity of the sector to deliver critical services in auditing, tax and insolvency.
