ACSI submission to the Senate inquiry on the Treasury Laws Amendment (Financial Reporting System Reform) Bill 2026.
Summary position
ACSI welcomes the introduction of the Treasury Laws Amendment (Financial Reporting System Reform) Bill 2026. Merging the Australian Accounting Standards Board (AASB), the Auditing and Assurance Standards Board (AUASB), and the Financial Reporting Council (FRC), into External Reporting Australia (ERA) is an opportunity to:
- take a pragmatic approach to supporting efficiency across the standard setting bodies
- establish an appropriate level of sustainability expertise and experience on the proposed Sustainability Standards Board, and
- support fit-for-purpose standard setting and guidance development.
Supporting the appropriate mix of knowledge and experience in Council and boards
ACSI supports the provisions establishing a Governing Council and specialist boards that possess an appropriate mix of knowledge and experience (sections 227A(4), 231(4) and 231(6)).
ACSI broadly supports the list of knowledge and experience outlined in the draft legislation, which includes financial markets, sustainability or climate change, and/or science. The inclusion of sustainability, climate change, and science should seek to support a pragmatic approach to standard setting that balances the provision of useful information to investors with the practical challenges of reporting.
ACSI supports the requirement that the “composition of a standards-setting board reflects an appropriate mix of persons with the qualifications, skills and experience that reflect both…the users of the kinds of standards determined for that board and…the users of materials prepared in accordance with those standards” (section 231(6)). As the Explanatory Memorandum (1.198) confirms, the users of material prepared in accordance with those standards includes investors. We consider that this section seeks to recognise the importance of investors in the market1, and the value of their experience and knowledge for a standards-setting board.
Nuanced application of the standards
ACSI strongly supports the draft legislation's statement (section 233A) that a "standard made or formulated by External Reporting Australia may...be of general or limited application (including a limitation to specified bodies or undertakings); and… differ according to differences in time, place or circumstance." We further strongly support the requirement in the draft legislation (section 233B(3)) for ERA to "have regard to the suitability of a proposed standard for different types of entities," and that ERA "may apply different sustainability requirements to different types of entities." The Bill supports better consideration of fit-for-purpose standards design that recognises and reflects the different types of entities that have reporting obligations, which should support efficiency in reporting.
Institutional governance
We support the draft legislation’s approach to balancing access to relevant and recent experience with preserving the independence of the Governing Council and boards. ACSI supports the Bill’s requirement that the Minister, when making appointments to the Governing Council, to consider the principles of, “an appropriate level of representation of persons who are, and are seen to be, independent from Australian auditors…[and] an appropriate balance of expertise or experience in fields relevant to External Reporting Australia’s functions,” (section 227A(5)(a) and (b)). We consider that these principles, in combination with the disclosure of interests requirements, adequately balance independence and relevant expertise. ACSI encourages the public disclosure of material personal interests. This will support a transparent process for balancing the inclusion of recent experience and preserving Council and board independence.
