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Audit laws must preserve independence.

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Media Release

Penny Wong Labor Senator for South Australia Shadow Minister for Employment and Workforce Participation, Corporate Governance and Responsibility

Sunday 6 November, 2005


The Shadow Minister for Corporate Governance and Responsibility, Senator Penny Wong, said today that Labor was open to considering minor changes to audit independence laws, provided they do not compromise audit independence.

"Minor changes to audit independence laws may be warranted, but preserving the principle and practice of audit independence is critical,” said Senator Penny Wong.

Senator Wong was commenting on the Financial Reporting Council's (FRC) intention to further review audit independence changes to address unintended anomalies.

"It was only a year ago that the parliament passed the new audit independence rules and so feedback about minor changes is understandable.

“Unintended consequences of the changes, such as in the areas of takeovers and audit tenders, may need reviewing.

Senator Wong also called for openness and transparency in the review process.

"The Treasurer should be clear about what the parameters of the FRC review will be, and commit to ensuring broad consultation and proper parliamentary consideration of any proposed changes.”

Senator Wong said that past experience has demonstrated the importance of audit independence to shareholders and to the integrity of the markets.

"The FRC’s report clearly reinforces the importance of the audit independence regime, and identifies a number of improvement areas for the big four firms,” said Senator Wong.

“Improvement in record keeping and staff training on independence obligations are still necessary.”

In considering any changes, Labor will consult with audit providers on the steps they have taken to meet the independence requirements, and consider any practical difficulties firms have encountered.

For further information:

• Nathan Fabian 02 6277 5789