Partners from the Big Four consulting firms could be banned from serving on the board of the tax advisory regulator, in the first legislative move against the companies since the PwC tax scandal.
After securing government agreement, the Greens will introduce an amendment to the Treasury Laws Amendment Bill to the Senate on Wednesday.
Their proposal would ban any any senior executive or partners working at tax companies with 100 or more employees or ongoing links to large firms – such as Big Four members Deloitte, EY, KPMG and PwC – from becoming a member of the Tax Practitioners Board, mitigating conflicts of interests.
Greens senator Barbara Pocock said the original bill didn’t pass “the pub test”.
“The Australian public won’t tolerate special privileges for highly paid tax accountants and their clients while they are required to observe the letter of the law,” she said.
“We’re kicking the foxes out of the hen house.”
The board regulates the tax advisory industry and maintains powers to deregister advisors who engage in serious misconduct.
But when PwC tax partner Peter-John Collins was revealed to have passed on confidential Treasury information to boost private sector business for the firm, 43 per cent of Tax Practitioners Board members were former partners from one of the Big Four companies.
Two of them were ex-PwC partners who were still receiving payments from the firm.
Though they recused themselves from the investigation, the composition of the board could still be perceived as a conflict of interest, because senior consultants were essentially being asked to regulate themselves.
But the Greens’ amendment could make the practice a relic of the past.
“Never again will we have members of the Tax Practitioner Board financially tied to those same large tax agents they are regulating,” Senator Pocock said.
Under the proposal, tax agents who have breached the code of professional conduct may have to report others who have done the same and proactively inform their own clients.
This prevents partners from protecting each other and turning a blind eye to unethical behaviour, Senator Pocock says.
The Tax Practitioners Code of Professional Conduct will also be updated so any adherents must maintain confidentiality, agree not to use government information for personal advantage, identify, avoid and declare conflicts of interest, uphold the code, not provide false or misleading statements and maintain client transparency.
“If we’ve learned anything from the PwC tax scandal it’s that we need to pay much closer attention to the regulation of the professional services sector in general and tax advisors in particular,” Senator Pocock said.
(Australian Associated Press)