You are required to read the
following statement issued by ICAA (Institute of Chartered Accountants...

Question

You are required to read the
following statement issued by ICAA (Institute of Chartered Accountants in
Australia and provide an essay of between 1,000-1,500 words (being the minimum
and maximum). It should be properly referenced and must be primarily of your
own work.

Press
release:Legislation to improve the quality and transparency of the auditing
process has been introduced into the House of Representatives this week by
Parliamentary Secretary to the Treasurer David Bradbury. The Corporations
Legislation Amendment (Audit Enhancement) Bill 2012is the result of a
Treasury review of audit quality and extensive stakeholder consultation during
2011 on measures that are designed to enhance audit quality and ensure that
Australia's regulatory framework remains in line with international best
practice.
Measures in the Bill include:

Requiring audit firms to publish an annual
 transparency report if they conduct audits of 10 or more significant
 entities

Empowering ASIC to issue an audit
 deficiency report in relation to an individual audit firm if it identifies
 an audit deficiency in the auditor's quality control system or the conduct
 of an audit that may be detrimental to the overall quality of the audit
 Removing duplication of ASIC and Financial
 Reporting Council (FRC) audit inspection responsibilities so that ASIC
 continues its audit inspection program and the FRC focuses on providing
 strategic policy advice and reports on the quality of Australian audits.
 Allowing ASIC to communicate directly with
 an audited body.
 Allowing a two-year extension to the
 five-year auditor rotation requirement where it will not give rise to a
 conflict of interest and will prevent the loss of knowledge and experience
 where rotation could undermine the quality of the audit.

ICAA report: Reforms to enhance Audit Quality
Available
from:www.chartered
accountants.co.au/industry-Topics/Audit-and-Assurance

Other sources:
AUASB website
CPAA website

Required:
Discuss
the following in your essay (approximately 1,000 words and no more than 1,500
please):
What
each of the above actually refers to and what it means. 
What
is your view, giving a rational explanation to your view (you may use other
sources to support your view, properly referencing). Why do you think that
these measures were introduced?

David · Accepted Answer

The ICAA (Institute of Chartered Accountants in Australia) has recently issued an article 
relating to the audit quality reforms included in the legislation introduced into the house of 
representatives, The Corporations’ Legislation Amendment (Audit Enhancement) Bill 2012. 
The legislation was introduced with the objective of improving the quality and transparency 
of the auditing process in Australia with a view to ensuring that the auditing process in 
Australia is maintained at par with the highest international standards. The bill has been so 
devised to include the following major provisions.  
First of all, it requires audit firms to conduct audit of 10 or more significant entities to publish 
an annual transparency report. These significant entities can be listed companies, listen 
registered schemes, authorized deposit taking institutions, and insurance companies. Thus, 
what it basically involves is that it requires those audit firms who conduct audits of 10 or 
more than 10 of such big and significant companies to publish certain factual information 
regarding these entities in the format prescribed by the legislation. The idea is to make such 
information available to the public. The purpose of this requirement in the legislation seems 
to be to bring transparency in the conduct of audit of certain important entities, through the 
requirement of publishing a report which contains certain prescribed information relating to 
them and making it available to the public. Further, the intention of the legislation to make 
this information available to the public is to increase the understanding of the stakeholders 
regarding the concerned auditors as well as the related audit work and its quality. It must be 
noted that the ICAA had shown its support to this particular measure in the legislation 
relating to annual transparency reports by sending a submission in this regard to the treasury.  
The second measure involves giving of power to ASIC to issue an audit deficiency report for 
an individual audit firm in case where ASIC finds an audit deficiency in the quality control 
system of that auditor, or in the conduct of an audit which may be detrimental to the overall 
quality of the audit. This provision gives enhanced powers to the ASIC, to not only carry out 
an inspection of the audit, but also where it finds deficiency in the conduct of the audit, to 
give an audit deficiency report. ASIC may also issue such a report,

You are required to read the following statement issued by ICAA (Institute of Chartered Accountants in Australia and provide an essay of between 1,000-1,500 words (being the minimum and maximum). It...

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