KPMG’s Cheating US Watchdog Fine Shows System Works: ASIC

“We certainly do not condone this behavior, and we believe it is unacceptable… however, the law is the law and the standards we apply are those we have received or given by this place.

Labor Senator Deborah O’Neill questioned the role of the PCAOB.

“We have not, to date, sought to expand our mandate to cover the particular issues that the PCAOB has identified and if I may suggest, senator, the fact that the PCAOB has a regulatory mandate and has captured this behavior and sanctioned , this indicates that there are checks and balances in the system. “

Mr Hughes said that the question of “whether there should be an additional tool in [ASIC’s enforcement] the arsenal will have to be [one] for the government and for this Parliament ”.

Ms. O’Neill asked Mr. Hughes about the “characterization of PCAOB as part of the regulatory system” in Australia.

“It’s not part of our system. It is not part of a national system for Australia. It’s a foreign entity in the United States, ”she said.

Mr Hughes replied: “The fact that the PCAOB has a mandate that captures Australian companies or individuals in Australia who are involved in conducting audits in the United States means that there was a control in place to identify and sanction the type of misconduct. .. whether we should have this tool is, as I said, senator, a question for the government.

Green Senator Nick McKim said ASIC had “essentially outsourced its responsibilities to the United States”. Alex Ellinghausen

Mr Hughes used a similar argument – that the PCAOB was “the appropriate body” to sanction KPMG – when asked by Green Senator Nick McKim about the regulator’s inaction on cheating in October. The ASIC commissioner added that the regulator had not written to the government asking for new powers since the KPMG fraud was exposed.

At the time, Senator McKim said it was “scandalous that an American body fined the Australian branch of KPMG, but not ASIC.”

“ASIC relies on a foreign regulator to oversee Australian accountants. They basically outsourced their responsibilities to the United States. If the Corporations Act does not give ASIC the power to take action against KPMG for massive cheating, then they should ask the government for legislative changes, ”he said.

Questions from The Australian Financial Review Regarding the potential extension of ASIC’s power to police, similar future misconduct by auditors has gone unanswered from the office of Senator Jane Hume, Minister of Superannuation, Financial Services and Digital Economy.

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