This is the final report on an inquiry into recent allegations of and responses to misconduct in the Australian operations of the major accounting, audit and consultancy firms (including but not exclusive to the ‘Big Four’, PwC, Deloitte, EY and KPMG), via a detailed investigation and analysis of regulatory, technical, and legal settings, and broader cultural factors. 

Structure of the report

• Chapter 3: structural and governance challenges in the Big Four firms, including: the impact of large partnership structures on effective governance and possible alternative approaches; and the impact of multidisciplinary firm structures on conflicts of interest between the provision of audit and non-audit services.
• Chapter 4: progress on implementing the committee’s recommendations following its previous inquiry into the regulation of auditing and new evidence received in this inquiry.
• Chapter 5: rationalising the regulators for audit and accounting.
• Chapter 6: professional bodies and standards including: oversight of the professional accounting bodies; legislative backing for professional and ethical standards; and the lack of professional bodies and standards for consultants
• Chapter 7: protection of whistleblowers.
• Chapter 8: competition in the audit sector.

Key recommendations

• The Australian Government not permit PwC or any of its related entities to tender for government work until the completion of all ongoing investigations including but not limited to those by the Tax Practitioners Board, Australian Federal Police and Australian Taxation Office. 
• The Australian Government consider increased accountability and response mechanisms, including a suitable penalty regime calibrated to the seriousness of the misconduct, for partnerships who have engaged in misconduct.
• The Australian Government legislate to enhance the Australian Security and Investments Commission’s power to take enforcement action against audit firms, not just individuals, including for quality management standards.
• The Australian Government consider additional mechanisms to ensure the Financial Reporting Council and any related standards boards, the Companies Auditors Disciplinary Board, the Australian Securities and Investments Commission, the Tax Practitioners Board, and the Australian Taxation Office and other government regulatory bodies are independent and are seen to be independent.
• The Australian Government consult with industry with a view to creating a consultancy code and associated consultancy code compliance body (with sufficient powers to ensure compliance with the code) within government that will register individual consultants and have graduated registration requirements for firms based on firm size.