CO-REGULATION FOR A BETTER ASIC
The Institute of Public Accountants (IPA) believes that the proposed industry funding model to support the corporate watchdog, ASIC, will deliver positive regulatory outcomes.
“We recognise the significant and essential role that ASIC plays in maintaining and facilitating the performance of financial systems, along with the critical role ASIC plays in maintaining confidence in capital markets by keeping market participants informed,” said IPA chief executive officer, Andrew Conway.
“ASIC needs to have the capability and resources to do its job, particularly considering the growing demand and increasing range of responsibilities.
“Alternative and more innovative approaches could include a co-regulation model where funding and responsibility is shared among key industry participants; this may assist in boosting ASIC’s capacity to fulfil its expanding role and responsibilities.
“The IPA proposes that the Government seriously considers the establishment of a formal co-regulatory environment in which some of ASIC’s responsibilities are shared with private participants.
“For example a model may be developed with a horizontal co-regulatory framework for the regulation and monitoring of auditors, along with associated enforcement activities, equitably shared amongst key stakeholders including the state, the accounting and auditing professions and private industry.
“Further research is required to determine the best funding model and we recommend that the Government looks at funding models operating in other jurisdictions such as the UK, US and New Zealand.
“We also recommend that further research is undertaken to consider the levy method in order to determine whether there is a more equitable allocation of costs among the different user groups.
“One alternative method may be to apply an activity based costing system which identifies the correct cost drivers applicable to the appropriate group being charged. This would result in a fairer system that appropriately allocates fixed and variable costs which would be monitored by the proposed dashboard system.
“The research required could be carried out by the accounting profession represented by the three peak professional bodies. The IPA would seek input from the IPA Deakin SME Research Centre,” said Mr Conway.