An overview of the White Paper ‘Restoring trust in audit and corporate governance’
Insurance 2022 - the year ahead
The insurance outlook for Australia’s audit and accounting firms is for increased threats and exposures due to tougher regulatory action, increased M&A activity, climate change and cyber risk pressures, ongoing big-ticket litigation and an industry wide skills shortage.
Negative findings from recent audit inspections remain stubbornly high and Australian Securities & Investments Commission (ASIC) will likely ramp up its supervisory and enforcement activities against Australian audit firms this year, particularly in relation to audits for listed and public interest entitles.
The recent prosecution of EC Audit and Robert Evett by the Commonwealth Director of Public Prosecutions, and related disciplinary action by the Company Auditors Disciplinary Board is a harbinger of further enforcement action to come, with the focus on the largest six audit firms.
As Australian audit firms struggle with a chronic shortage of skilled auditors, we predict a likely increase in deficient audits, followed by further enforcement actions. Volatile economic conditions will feed an M&A frenzy across the country and contribute to more corporate collapses, highlighting the need for high quality financial reporting services.
The Australian Taxation Office (ATO) will continue to pursue accounting firms and their clients in relation to audits of Significant Global Entities, and audit and accounting firms will be pulled into more insolvency related litigation and securities class actions.
Finally, audit firms will face significantly greater pressures this year to grapple with enhanced climate and cyber related disclosures.
All in all, 2022 looks set to be an extremely challenging year for Australian accounting and audit firms and their insurers.