Accounting, Legislation, Regulation

Single financial reporting body to be formed

Australian Accounting Standards Board Auditing and Assurance Standards Board Financial Reporting Council amalgamated merger

The government will amalgamate three existing financial reporting bodies into one entity that will implement new climate and sustainability standards.

The federal government has announced its intention to combine three existing financial reporting bodies into one entity in a move designed to assist the country in implementing new climate and sustainability standards.

Under the proposal, the three financial reporting bodies, being the Australian Accounting Standards Board, Auditing and Assurance Standards Board and Financial Reporting Council, will be amalgamated into one unit.

“In addition to accounting and auditing standards, this new integrated body will better support the ongoing implementation of climate‑related financial disclosure standards in Australia. It is intended that the body will be operational on or after 1 July 2026, subject to the passage of legislation,” Treasurer Jim Chalmers noted.

“Business, investors and other stakeholders will benefit from engaging with a single entity, helping to increase regulatory consistency, reduce red tape and unnecessary costs and avoid duplication.”

The government confirmed the Auditing and Assurance Standards Board will continue its current work on climate‑related financial disclosure standards.

Details of the governance arrangements for the new entity are in the process of being finalised and draft legislation will subsequently be released covering implementation of the measure, including an industry consultation period.

However, the government has already received criticism regarding the consultation process associated with the initiative.

To this end, Chartered Accountants Australia and New Zealand (CAANZ) advocacy and international development group executive Simon Grant suggested consultation for the measure has not been broad enough.

“While it is good to see concerted efforts and focus on implementing important climate and sustainability standards – something we have consistently shown a willingness to work with the government on – we are disappointed the announcement was made without effective profession, industry and capital markets consultation,” Grant said.

Specifically, he expressed his concerns around a lack of detail as to Australia’s alignment to international accounting, audit and sustainability standards setters, and how the move will be funded.

“CAANZ and many other stakeholders have urged the government to establish a focused sustainability standards board to have the right expertise and international alignment from the outset,” he noted.

“Today’s announcement is the largest reform to the accounting and audit standard setting bodies in decades and yet it was revealed via a speech in a public forum.”

The criticism follows concerns expressed by a group of joint bodies covering financial advice and tax professionals as to amendments pertaining to the reporting of breaches of the Code of Professional Conduct in the Tax Agent Services Act 2009.

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