18 Nov ASIC launches credit card and travel expenses review
Michael Roddan – Australian Financial Review – Wednesday 18 November 2020
The corporate watchdog has launched a widespread review of its travel expenses, allowances and corporate credit card spending following the sidelining of its chairman James Shipton over a claimed $120,000 personal tax advisory bill.
The Australian Securities and Investments Commission earlier this month appointed Melbourne-based Pitt Group to provide assurance advice over its corporate expenses and to help develop an “audit reporting tool”.
The contracts, worth a combined $65,000, were issued after Mr Shipton stood aside from his role after the Australian National Audit Office raised questions over a $118,557 KPMG tax services bill that was paid for by ASIC in 2018.
ASIC deputy chair Daniel Crennan resigned last month after the ANAO also escalated concerns about $69,621 worth of rent for the watchdog’s chief enforcement officer. Both men have repaid their claimed expenses.
While the Pitt Group’s review of internal ASIC spending is due to finish in January, the former inspector-general of intelligence, Vivienne Thom, is conducting a separate independent review of ASIC’s remuneration and procurement processes.
Pitt Group general manager Michael Pitt declined to comment, as did an ASIC spokesman who said the Pitt Group was not examining the expensesof Mr Shipton or Mr Crennan in particular.
ASIC acting chairman Karen Chester is due to appear at The Australian Financial Review Banking & Wealth Summit on Wednesday and before the Parliamentary Joint Committee on Corporations and Financial Services. The ANAO is also due to appear before Parliament.
Liberal senator James Paterson, chairman of the Parliamentary Joint Committee, last week wrote to ASIC seeking a copy of the report provided by behavioural experts to the regulator’s leadership team.
However, ASIC declined to release the findings, which it said were provided by global leadership advisory firm Egon Zehnder “verbally” in December 2019 during a “full day workshop” with commissioners.
“Individual feedback reports were provided prior to that workshop to respective commissioners. Those reports are of a nature … not requiring production to the committee because they related to individual performance feedback,” ASIC said in its response to the question on notice.
Ms Chester has previously said ASIC’s full leadership team were not aware of Mr Shipton’s tax bill until after the ANAO expressed concern in September this year, and that most commissioners were unaware of the ANAO’s concern in August 2019 about $750-a-week housing payments for Mr Crennan after he relocated from Melbourne to Sydney for work.
ASIC did not seek approval for the payments from the remuneration tribunal, which irked Auditor-General Grant Hehir. Last month, Mr Hehir told Treasurer Josh Frydenberg that the matter was of “such importance” he was directly contacting the Treasurer to “gain greater confidence that appropriate action would be taken”.
Pitt Group has provided audit services and internal audits for a range of government departments and agencies, including ASIC, the Australian Commission for Law Enforcement Integrity, the Australian Competition and Consumer Commission, Centrelink and the Department of Defence.
Relations between ASIC and the Morrison government have been strained amid the regulator’s loss in a responsible lending court case against Westpac. Mr Frydenberg has proposed to ditch the laws but the move may be blocked in the Senate.
Other government MPs have suggested ASIC steer clear of “policy making”and focus on enforcement. Recent legislation passed by the Coalition on which the regulator has consulted – such as design and distribution obligations and ASIC’s new product intervention power that were recommended by the government’s Financial System Inquiry – seek to put the onus on industry to self regulate and eliminate toxic products.