The Institute of Public Accountants (IPA) has come out in support of the proposed industry funding model to support the Australian Securities and Investments Commission (ASIC) and believes it 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,” IPA chief executive Andrew Conway said.
“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 capability to fulfil its expanding role and responsibilities.”
The federal government should seriously consider the establishment of a formal co-regulatory environment in which some of ASIC’s responsibilities were shared with private participants, Conway said.
“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,” he noted.
However, further research was required to determine the best funding model and the government should examine the models used in other jurisdictions such as the United Kingdom, United Statesand New Zealand, the IPA said.
“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,” Conway said.
“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.”
According to the IPA, 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, Conway added.