Nash Stuart: Auditor Regulation and External Reporting Bill — In Committee 
Nash Stuart: Auditor Regulation and External Reporting Bill — In Committee 
[Volume:672;Page:18303] 
STUART NASH (Labour) 
: 
 I seek your indulgence Mr Chair to talk again about Subpart 3 of Part 2 “Register of licensed auditors and registered audit firms”. This is a very important provision; I think it is a great idea personally. It starts with clause 29 which basically states: “The Registrar must establish and maintain in accordance with this subpart a register of licensed auditors and audit firms.” 
I have a slight issue in respect of clause 30 “Operation of and access to register” which makes sense. It has to be there. It states that the register “may be kept—(a) as an electronic register; or (b) in any other manner that the Registrar thinks fit.” That makes sense but then it states: “The register must be available for access and searching by members of the public unless suspended under subsection (3).” I am not too sure what that means because when I look at subsection (3) I see that it states: “The Registrar may refuse access to the register or otherwise suspend the operation of the register in whole or in part—(a) if the Registrar considers that it is not practical to provide access to the register; or (b) for any other reason that is prescribed by regulations”. 
Again I have a little bit of difficulty with the language that is used here. I am just wondering under what circumstances the registrar would decide to refuse access to the register and what the test is for practicality and for what is not practical. Does it mean that if a bloke comes in at 4 o’clock on a Friday and the registrar has a game of golf at 5.30 as far as he or she is concerned it is not practical? I am using a ridiculous example there but again it has not been quantified. I think the investing public would probably not mind knowing what that test of practicality is because it is quite important. 
Clause 31 talks about the purpose of a register which is quite important. It will enable any person to “determine whether a person is a licensed auditor and if so the status and relevant history of that person’s licence;”. That makes complete sense because as we say it is about transparency knowledge and getting information out there. If a person has come to me and wants to audit my firm as a licensed auditor it is only fair and right that I should be able to go somewhere and determine whether that person is telling the truth. If for another reason I want to find a registered auditor I can go to the register. But if the registrar considers that it is not practical to provide access to the register what does that mean? When I turn up does the registrar say: “Sorry it is not practical.”? It is interesting and it would have been good to have that quantified a little bit more. 
As for the provisions on the purpose of the register one thing here sets off a little bit of an alarm bell for me. Clause 31(a)(iii) states that the purpose of the register is to enable any person to “know which licensed auditors have been disciplined within the last 7 years.” That is very interesting. Earlier we talked about people having to be fit and proper persons to become registered auditors but this clause implies that in fact an auditor can have been disciplined within the last 7 years. It may be set out in this bill—as I said it is a 100-page bill and there is a lot of work here—but under what conditions can an auditor be disciplined yet allowed to remain as a licensed auditor? 
I am assuming that this discipline process works by a person putting a case to the relevant authority—which I assume in this case is the Financial Markets Authority—their complaint is heard and maybe the Financial Markets Authority disciplines that auditor. The disagreement in that case might be over the size of the bill charged. But if the person has been disciplined due to a really serious consideration to do with fraud or negligence is there a process for expelling that person? I would have thought that if a person had been disciplined they would not fit the “fit and proper person” test. Maybe I am wrong and maybe I am being a bit too hard but as mentioned the role of the Financial Markets Authority must be to restore the confidence of the investing public in our financial markets. Maybe this is where that role becomes practical. If someone complains to the registrar saying that it is unfair and breaches their privacy rights that the register states that they have been disciplined which they do not want people to know that may be a practical test.