Comparison of auditing legislations in US, UK and New Zealand with Australia.

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Introduction

Corporate Law Economic Reform Programme also known as CLERP was came into being on 4 March 1997. It represents a structural review of Corporate Law in six key areas of corporate and business regulation. Those six areas were accounting standards, fundraising, directors duties and Corporate governance, takeovers, electronic commerce, financial markets and Investment Products.

CLERP is a program to modernise Australia's Corporations Law and give it an economic focus. Its aim is to introduce world's best practice in business regulation. It is part of the government's broader goal of making Australia a leading financial centre in the region. CLERP is designed to harmonise Corporations Law with pro-enterprise, pro-jobs and pro-investment objectives. One of the underlying objectives of CLERP is to ensure business regulation is consistent with the promotion of a strong and vibrant economy; to facilitate business in the Asia Pacific region and elsewhere. CLERP is intended to improve not only the expression, but also the content and initiative of the law.


The introduction of CLERP 9

The federal government has issued a policy paper CLERP 9 as part of its Corporate Law Economic Reform Program in September 2002 and has been implemented on 1st July 2004. It intended to introduce legislation into parliament in 2003. It would consider the issues including the institutional framework for setting auditing standards and whether they should be given the force of law. It has also made a number of recommendations for improving auditor independence (Gay & Simnett, 2003, p.100).

The principal issues

(i)        The introduction of CLERP 9 will see Parliament play a key role in the final content of auditing standards. Parliament would demonstrate leadership with this new responsibility as it could play a key role in determining the quality and international harmonisation of audit standards.

(ii)        CLERP 9 transfers the functions of the Australian Auditing and Assurance Standards Board to the Financial Reporting Council. That means auditing standards having the force of law.

(iii)        CLERP 9 endorses the continuation of the existing co-regulatory environment. It provides recognition that the responsibilities for good corporate governance are shared by a number of parties and not just a select few.

(iv)        CLERP 9 will include the implementation of an Auditor Competency Regime. It should enable additional competent auditors to become registered particularly in rural and regional areas. As the importance of the registered company auditor is increasing, out-of-date registration solutions are impeding the recruitment of new, qualified registrants.



Related to the audit function

Good governance has been the subject of much consideration and public debate in recent times. And for good reason.  The community is entitled to be assured that practices in the public and private sectors are as they should be in order to maintain confidence.  Where confidence is eroded, governments must act to re-establish confidence in our institutions – hence there was the introduction of the Carbines/Oxley legislation in the USA, and CLERP 9 here in Australia.

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The Government's CLERP Program has steadily modernised Australia's corporations law and given it an economic focus, introducing world's best practice in business regulation. Market developments continue to focus the Government's attention on regulation that protects the legitimate interests of all market participants, including the individual owners of shares and the companies in which they invest.  Australia is well served by a highly skilled accounting profession. However it is timely for Australia to review its own regulatory framework in this area, in view of widespread questioning overseas of the quality of financial disclosure and supporting regulatory structures.

So the ...

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