While CPA Australia endorses the move, it has identified possible problems with governance and due process in the proposed arrangement. Credit: metamorworks/ Shutterstock.com.
CPA Australia has called on the federal government to enhance governance and accountability measures within the proposed financial reporting reforms Australia, cautioning that the current draft legislation may weaken confidence in the independence of standard-setting.
The Treasury Laws Amendment Bill 2025 puts forward a plan to merge the Australian Accounting Standards Board (AASB), Auditing and Assurance Standards Board (AUASB), and Financial Reporting Council (FRC) into a new body named External Reporting Australia.
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This entity would include a governing council overseeing three initial standard-setting divisions focused on accounting, audit and assurance, and sustainability reporting.
While CPA Australia endorses updating the reporting framework through the addition of a sustainability standards board, it has identified possible problems with governance and due process in the proposed arrangement.
In a submission made jointly with Chartered Accountants Australia and New Zealand, several areas of concern were listed.
According to the joint submission, there is a lack of detail regarding due process. It said, “a detailed due process framework is needed. This should be established and referenced in the draft bill.”
The document further notes that how the Governing Council and minister are involved in technical standard-setting could affect transparency as well as stakeholder confidence.
The submission explains that “whilst this is recognised in principle, the details need to recognise and bring forward some of the existing strengths like research capabilities, international relationships and intellectual capital.”
CPA Australia has suggested several amendments, which include setting minimum board sizes, ensuring balanced representation from different stakeholders, referring specifically to a detailed due process framework in law, and removing any sections that might threaten the balance between broad oversight and technical standard-setting responsibilities.
CPA Australia financial reporting lead Ram Subramanian said: “The current draft legislation gives the Governing Council significant powers without adequate safeguards, including the ability to make or vary standards and determine the structure and composition of the standard-setting boards. This creates a real risk of undue influence and erodes the integrity of the process.”
Subramanian added: “We’re calling for clear legislative requirements for transparency, public consultation and balanced representation on the Governing Council and boards. Without these, Australia risks losing the strengths of its current model and diminishing its influence internationally.”
In November 2025, Subramanian commented on the proposed oversight body merger.
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