The accounting body said that multi-disciplinary firms were essential to high-quality audits of complex public interest entities.

“The law recognises and regulates business structures in the public interest to protect investors, creditors and other stakeholders,” the submission said.

“Professionals choose structures that meet their business requirements. Accordingly, the CA ANZ bylaws and membership criteria are agnostic as to the lawful business structures used by members to provide accounting and other services.”

CA ANZ said the issues that gave rise to the PJC inquiry into the audit, assurance and consultancy industry did raise valid questions about whether additional governance, reporting or other regulatory obligations on the big four were in the public interest, given the impact of misconduct within large firms on public confidence and other stakeholders.

The body said while it supported regulatory reform, such as requiring increased levels of transparency for accounting practices, it cautioned against imposing “arbitrary restrictions on the use of particular business structures”.

CPA Australia also warned against introducing constraints on business structures until detailed consideration of the impacts on the public, consumers and smaller firms had been undertaken.

However, the accounting body said that the introduction of new entity types such as limited liability or large partnerships might provide a pathway to better define and capture partnerships for reporting and monitoring purposes.

“As recognised in the government response, structural reforms will require collaboration with states and territories given the cross-jurisdictional regulation of partnerships,” the CPA Australia submission said.

The accounting body said the primary concerns relating to firm structure were associated with reporting and disclosure requirements, especially given the size and impact of larger firms.

“As such we believe it is appropriate that professional services firms of a certain size or presence should be subject to the same financial and transparency requirements, regardless of structure,” it said.

“Therefore, we support the introduction of improved reporting and disclosure requirements for those larger accounting firms that are currently not obligated to report.”

Disclosures could include details of board and executive/partner remuneration, governance reports, mandatory reporting of material risks, related party disclosures or full general purpose financial reporting requirements, the submission said.

CPA Australia said consideration could also be given to including requirements to disclose material breaches of the code and any penalties imposed by Australian and international regulators such as the Public Accounting Oversight Board, TPB and ASIC.

CA ANZ said the government could examine the scope of reporting required by large professional firms through a detailed policy review to determine the needs of stakeholders and what specific reporting was likely to best meet stakeholders’ needs.

Other stakeholders such as Macquarie University have called for more drastic action to rectify the failures in the audit, assurance and consultancy industry including a structural split within the Big 4 accounting firms.

Macquarie University professors James Gunthrie, John Dumas, Dr Twyford and James Hazelton recommended that the Big 4 accounting partnerships undergo a structural split at the start of 2025 between the audit and consulting parts of the firm.

“Instead of an operational split, a structural split is needed. Under this split, the audit firms would only conduct audits and neither the firms or their associates could sell any consultancy to audit clients,” the submission said.