A new submission to the Treasury on the regulation of accounting, auditing, and consulting firms in Australia has recommended separating the auditing and consulting arms of accounting firms, while regulating both in line with corporations in order to guard against future misconduct.
Tue 18 Aug 2026 10.23 AEST
Photo: AAP Image/Joel Carrett, Diego Fedele, Dan Himbrechts
A new submission to the Treasury on the regulation of accounting, auditing, and consulting firms in Australia has recommended separating the auditing and consulting arms of accounting firms, while regulating both in line with corporations in order to guard against future misconduct.
The submission, from The Australia Institute, comes in response to several scandals which have exposed serious governance and ethical failures in the big four firms.
High-profile examples include PwC’s tax leaks scandal in 2023, and KPMG’s audit whistleblowing scandal this year.
The Institute’s Director of Corporate Regulation, Josh Bornstein, said it was a structural problem that required a structural solution.
“Breaking up the big four will dramatically reduce the incidence of conflicts of interest and misconduct,” Mr Bornstein said.
“The big consulting firms look and act like companies, albeit badly behaved companies. It’s time to tax and regulate them like companies”.
The report argues “the only way to effectively address the structural conflicts of interest within accounting firms is to enforce structural separation of their consulting and audit functions by splitting the firms into two separate entities.”
“While the current regulatory framework was intended to manage conflicts of interest, there is a significant record of misconduct,” the report said.
“Regulating large audit firms in line with corporations would do much to deter future misconduct.”
Mr Bornstein pointed out that the move was vital for restoring trust and helping safeguard against future scandals.
“When big business is out of control and causing harm, voters expect their politicians to step in and say enough is enough, not just work around the edges,” he said.
“Breaking up the big consulting firms is the only way to restore trust and prevent future scandals.”
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