ASIC is threatening criminal sanctions in its response to the PwC scandal. 

Following criticism over the conduct of senior partners at PwC, the Australian Securities and Investments Commission (ASIC) is intensifying its oversight of audit quality, hoping that the prospect of criminal sanctions will drive improvements. 

While the annual quality inspection reviews have been reduced from 45 to 30, Greg Yanco, ASIC's Executive Director of Markets, says criminal actions against auditors will be a more potent method of ensuring audit quality. 

The new approach considers broader factors such as conflict of interest management, quality reviews, and independence policies. Yanco says enforcement action will be taken for violations.

The move comes as ASIC aims to address concerns about transparency and conflicts of interest within the accounting sector. 

The regulator stopped publishing its annual report naming and shaming audit firms over poor audits, opting for a more comprehensive and systemic approach. 

ASIC has hinted at potential measures to separate consulting and audit arms within professional services firms to mitigate conflicts of interest.

Meanwhile, companies say they are proactively addressing potential conflicts. 

South32 CFO Sandy Sibenaler has highlighted the company’s commitment to audit independence, refusing to hire their auditor, KPMG, for non-audit services. 

The broader market's ability to provide these services without compromising independence was underscored.

In related news, Chartered Accountants ANZ has ruled that PwC Australia must pay nearly $100,000 and undergo regular reports following the tax leaks scandal. 

CA ANZ CEO Ainslie van Onselen says sanctions are crucial for instilling public confidence in the profession's integrity. 

PwC accepted the ruling, stating they made significant changes to governance, culture, and accountability after the tax leaks matter. 

The maximum firm fine for such behaviour has been increased to $250,000, effective from next year, as part of broader disciplinary reforms to rebuild public confidence in the sector.