Call for rules shake-up to avoid 'Enron style' collapses in Australia | adele_ferguson clancyyeates
The revelations, which included evidence of a very close "no surprises" relationship between NAB and EY, sparked an immediate parliamentary inquiry into the management of conflicts of interest between consulting companies and their clients.
He said the management of conflicts of interest for auditors was a global problem with big firms cutting audit fees to get the higher paying consultancy work. The leaked documents also included confidential private observations by EY consultants that were far blunter than the phrasing used in the draft report. APRA was sent a copy of the final report.
Mr Medcraft, who had worked as an auditor earlier in his career, said the big accounting firms were an influential oligopoly."If you want independence you need to ask who is paying the bill?" he said. "He who pays is master or mistress of the servant so there needs to be a change in culture on that issue.
The inquiry will look into the relationship between auditing and consulting services and potential conflicts of interests, other conflicts of interest, the level and effectiveness of competition in audit and related consulting services, audit quality, the role of audit in detecting fraud and misconduct, and the effectiveness of enforcement by regulators and other matters.
In April, the UK Competition and Markets Authority recommended that the audit and consulting arms of the big four global accounting firms be split into separate operating units to reduce the influence of the consulting practices upon the smaller auditing divisions and avoid conflicts of interest.
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