Corruption Clerp9

CLERP 9
• Following the development of the
Commonwealth Law and Economic
Reform Program discussion paper No. 9
(CLERP 9), the paper was subsequently
passed into law
• It became the CLERP 9(Audit Reform
and Corporate Disclosure) Act 2004
(usually referred as the CLERP Act
2004) and laid down certain
requirements
Financial Reporting Council
• Both accounting and auditing standardssetting are now under the control of the
Financial Reporting Council (FRC), a
government appointed body – both areas
previously controlled by the accounting
profession
• The FRC oversees auditindependence and
is required to report to the Australian
Treasurer annually on audit independence
matters
Retention of audit working papers for 7
years
• Certain audit competency standards are to
beestablished
• A new audit liability framework is
introduced
• Prohibition of conflict of interest situations
and a list of non non-audit engagements by
auditors
• Four years waiting period fora retiring
partner to join an audit client
• Rotation of lead and review partners every 5
years, with a minimum cooling off period
of 2 years before reassignment to the audit
• Auditors arerequired to attend AGMs and
to answer questions
• Auditors are required to report any breach of
the law by the client on a timely basis
Conclusion
• The collapses of Enron, WorldCom, Arthur
Andersen,HIH etc. and the resultant loss of
billions by shareholders, have led to seminal
changes in regulation of the accounting
profession and business
• Business is now under pressure to have
moretransparent corporate governance
processes and are now subject to increased
regulation and compliance requirements
• The profession has effectively lost its self
regulatory status
• We are allpaying the price for corporate
greed and the failure of ethical standards in
the profession
• It will take a number of years for the
accounting profession to rebuild the trust,
credibility and...