Aside from these eye-watering numbers, which happened while the public service shrunk by more than 8 per cent to 152,095 over those five years, the audit office also highlighted a range of gaps in the tender data.

One startling gap is the government has no idea how many contractors – the go-to solution when work needs to be done but public service numbers have been capped by government policy – are working across the departments. The committee has already sent off requests for contractor information to the 29 largest departments.

The "Australian Government Procurement Contract Reporting" inquiry will be open to submissions until February 16.

Auditing the auditors

The big four accounting and consulting firms will also have to contend with a renewed focus by investors and regulators upon audit quality this year.

The "Australian Government Procurement Contract Reporting" inquiry will be open to submissions until February 16. Alex Ellinghausen

As the four have grown into more diverse areas such as marketing advisory and legal services, so have the potential for conflicts of interest between their core auditing practices and the various consulting businesses. That's not to mention the interest the tax office is taking in the way companies, with the help of the firms, structure their arrangements.

The impact of this increasing scrutiny of auditors has been in the headlines overseas constantly in the past two months. PwC's auditing arm was banned from auditing listed companies in India for two years; US prosecutors have charged three KPMG partners over the use of inside information from the US audit regulator and the South African accounting watchdog has launched an investigation into Deloitte's auditing of embattled furniture retailer Steinhoff International.


In Australia, the outgoing head corporate regulator, Greg Medcraft, went into detail about why he thought the quality of corporate audits is appalling and getting worse.

The firms did not take kindly to the criticism, while accountants union Chartered Accountants ANZ questioned the entire way the Australian Securities and Investments Commission reviews the work of auditors. The professional body found it "disappointing that all the good work by partners and staff at the firms is not being reflected" in the ASIC audit inspection reports.

Greg Medcraft went into detail about why he thinks the quality of corporate audits is appalling and getting worse. Louise Kennerley

ASIC's response came a month later, in its December report on the quality of financial accounts.

The corporate regulator said its reviews showed that directors and auditors needed to lift their game when it came to valuing assets and choosing accounting policies.

The regulator also issued a separate statement, accusing a PwC partner of failing to gather enough evidence while auditing the collapsed education provider Vocation. The partner, Steve Bourke, denied any wrongdoing but voluntarily cancelled his registration as a company auditor. He is staying on as the chief financial officer of the firm's audit team.

Acquisitions, health and professional bodies


Other key issues for the firms and the wider industry to navigate this year will include the ongoing battle for acquisition targets, workplace health and the role and regulation of professional bodies.

The big acquisition move in the local industry last year was Accenture splashing out $63 million for advertising firm The Monkeys. If nothing else, the move demonstrated the money US-listed Accenture was willing to deploy and happened in a year when the firm spent $US1.7 billion ($2.1 billion) on acquisitions globally. This contrasts with rival firms, which are mostly partnerships and tend to be more conservative about the way they spend.

The focus on the type of behaviour that is acceptable in the workplace will also be front of mind. The firms are all working on making changes to improve the workplace health of staff but there is often a gap between how the companies present themselves to potential employees and what it is actually like as a staff member or partner.

In a service business, the experience of an individual will often come down to their direct client, manager and partner and a falling-out with any of these parties can quickly lead to a toxic workplace. Expect allegations of bullying or sexual harassment to come under more scrutiny. It's a hot-button issue: last year's most popular accounting and consulting story was about a workplace bullying case at PwC.

Also expect professional bodies to have to work harder to prove they are still relevant. The CPA saga, among the most popular stories with readers last year, still has some way to run. The body is yet to pick a new CEO and there remain big questions around the perceived threat to use sanctions to silence critical members. Some CPAs have given up their membership and gone to rival body Chartered Accountants ANZ while others have dropped out completely. There will also be more scrutiny of how these semi-regulatory bodies spend member money and how they pay their leaders.

edmundtadros@afr.com.au

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