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Auditor independence is at the heart of audit quality. Auditors must be independent in mind and appearance, therefore not only must auditors act independently, but they also need to be perceived as independent by the public. Following its 2019-2020 inquiry, the Parliamentary Joint Committee on Corporations and Financial Services (PJC) highlighted two main issues of relevance to auditor independence: the perceived closeness of the auditor with the audited entity, and the provision of non-audit services.

In a nutshell

To advance public trust in the Australian audit profession and improve audit quality, the PJC led an inquiry into the Regulation of Auditing in Australia and in November 2020 issued its final report containing 10 recommendations. The Federal Government is yet to formally consider the report recommendations.

Three of these recommendations relate to auditor tenure and auditor remuneration. The PJC recommended that entities be required to disclose auditor tenure in their annual financial reports and that the current auditor remuneration disclosure requirements be significantly enhanced. Ahead of any formal Government response, regulatory stakeholders1, are actively considering possible approaches to address these specific recommendations. Specifically:

  • the AICD2 is developing guidance for directors on disclosing information on audit tenure which it plans to publish in the next financial year for voluntary adoption
  • the APESB have proposed changes to APES 110 Code of Ethics for Professional Accountants (including Independence Standards) detailing the specific categories of services that may be provided by an auditor (this will assist in determining auditor remuneration disclosures in financial reports)
  • the AASB are developing an Exposure Draft to ehance auditor remuneration disclosures in the financial report.

We recognise that greater transparency and clarity is needed for the public to gain further insight into audit services and tenure. We support the PJC recommendations as part of our commitment to enhance transparency and trust in the auditing profession.

Eileen Hoggett
National Managing Partner
Audit, Assurance & Risk Consulting

In this reporting update, we discuss these three recommendations in further detail. We also provide illustrative examples for entities seeking to voluntarily include enhanced disclosures on auditor tenure and auditor remuneration in their annual financial reports in advance of legislation or standards being issued mandating them.


  1. Including the Financial Reporting Council (FRC), Australian Securities and Investments Commission (ASIC), Australian Auditing Standards Board (AASB), Australian Accounting Standards Board (AUASB), and Accounting Professional & Ethical Standards Board (APESB).
  2. Australian Institute of Company Directors.

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Find out more about these three recommendations, along with illustrative examples, by downloading our reporting update.

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