Australia's ASRB. A Case Study of Political Activity and Regulatory ‘Capture’

Abstract

The establishment of an Accounting Standards Review Board (ASRB) in Australia followed proposals for greater government and community involvement in the development of accounting rules, and concern about the low level of compliance with the accountancy profession's standards. The profession had opposed proposals for a review board. The Ministerial Council for Companies and Securities overrode these objections, yet avoided giving any formal authority to the ASRB. In this environment the way was left open for renewed opposition to arrangements which had reduced the profession's capacity to control the standard-setting process. The newly-formed ASRB was vulnerable if it was unproductive—and it encountered delays and difficulties in receiving and processing submissions from the profession. The Board lacked the authority (and the will) to enforce its priorities. After two years the Board abandoned earlier efforts to secure wider community participation in its activities, and announced ‘fast track’ procedures which were to be applied only to those standards which the profession chose to submit for review. This history suggests that the ASRB had been ‘captured’ by interest groups that it had been established to regulate. The history also casts doubts on claims that the political processes adopted in Australia for the development of accounting rules are consistent with notions of ‘pluralism’; rather, those arrangements seem closer to the form of interest-group politics labelled ‘neo-corporatism’.

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