The Audit Enhancement Bill 2012

The Corporations Legislation Amendment or Audit Enhancement Bill 2012

The Corporations Legislation Amendment or Audit Enhancement Bill 2012

Introduction

This paper intends to expound the legislation issued by Institute of Chartered Accountants in Australia to the Treasurer David Bradbury. The legislation attempts to improve the quality and transparency of the auditing process in order to keep the Australia's regulatory framework in line with the best practices of international. The corporations' legislations amendment bill 2012 was established on 29th February, 2012 into the Federal Parliament. However, the bill passed the House of Representatives on 13th March, 2012 and now it is before the Senate. Furthermore, the bill is primarily based on the consultation paper which was published in 2010 by Treasury named as the 'Audit Quality in Australia: A Strategic Review'. Since, Australia already has the effective quality framework but this Bill also attempts to energize the overall system and assist to further fortifying the regulatory oversight in order to make sure that the standards of Australian firms are aligned with the international best practices (Bradbury, 2012).

Hence, in short, the application of audit enhancement bill will enable the Australia to keep maintaining the vigorous regulatory environment which will ensure providing the shareholders, stakeholders, and companies with the robust confidence in the transparency and liability of the auditing firms and their processes (GAAP Alert, 2012). The study will provide the components of Audit Enhancement Bill comprehensively while highlighting the each of the component separately.

Discussion

The legislation primarily aims to support the continual enhancement of the audit quality in Australia. The legislation has the numerous reforms which happen to enhance the audit quality framework of Australia and at the same time ensure the maintenance of the best international standards (Institute of Chartered Accountants Australia, 2013). This bill is considered as the increment as well as worthwhile improvement process to the audit program. The Audit Enhancement Bill holds five key measures to be incorporated in the Audit firms which include the following requirements (Grant Thornton, 2013):

The act requires if the audit firms conduct the audit of ten or more entities then they are required to publish the annual transparency report.

The audit firms are required to empower the ASIC to issue audit deficiency report in case of identification of audit deficiency and the detrimental quality of the audit or the quality control system.

The audit firms need to eliminate the replication of FRC and ASIC audit inspection accountabilities in order to enable both of the authorities, AISC and FRC, to continue with their audit work pertinent to audit inspection and formulation of strategic policy reports for the improved quality of Australian audits.

The act permits ASIC to communicate its concerns directly with the audited entities.

The auditing firms are required to rotate off an audit for five successive years into the two years extension for the listed companies where it will attempt to prevent the problems of conflict of interest, loss of knowledge, and undermine the quality of audit.

Annual Transparency Report

The act says that minimal ...