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The Subtraction Test: What ASIC and APRA's FAR Simplification Reveals About Regulatory Design and Practice Compliance

Darby Taylor•Nov 14, 2026•
8 min read
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In a regulatory environment where new obligations arrive faster than most practices can absorb them, a decision to take a requirement away is almost unheard of. That is what makes the latest move by the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) worth attention. Both regulators have finalised changes that simplify reporting under the Financial Accountability Regime (FAR), removing the need for entities to report key functions and direct reports on accountability maps.

For accounting professionals, the change is more than a technical update for banks and financial institutions. It offers a useful lens on a question many practices are now asking: when regulation becomes heavier, what does genuine simplification look like, and how should advisers respond when it arrives only in narrow pockets?

What Changed Under the FAR

According to The Accountant, the finalised changes eliminate two specific reporting elements from the accountability maps that entities must maintain. Accountability maps are the documents that set out who is responsible for what within a regulated entity, and they sit at the centre of the FAR's design. Its purpose is to make individual accountability visible, so that when something goes wrong, responsibility can be traced to named senior people.

Removing the requirement to report key functions and direct reports reduces the granular detail that entities must provide. The underlying accountability framework remains intact. What falls away is the administrative effort of mapping and reporting the operational detail beneath it.

The Australian Securities and Investments Commission (ASIC) and APRA have finalised changes to simplify reporting under the Financial Accountability Regime (FAR), eliminating the need for entities to report key functions and direct reports on accountability maps.

Summary of the regulators' finalised changes, The Accountant

The distinction matters. Regulators can simplify how obligations are evidenced without weakening the obligations themselves. Accountants advising regulated entities should separate those two ideas when they review their clients' governance documentation.

Why Subtraction Is Rare and Important

Australian regulatory reform over the past several years has been dominated by addition. New disclosure regimes, expanded reporting duties and enhanced penalties have accumulated, often with overlapping timelines. Practitioners have reported that the cumulative effect, rather than any single measure, is what strains their capacity.

That context is captured in industry analysis from BOSS, which argues that stacked tax reforms now stretch practice capacity more than any single measure. The analysis points to simultaneous changes across capital gains tax valuations, discretionary trust rules and AML/CTF reporting duties. Each may be defensible on its own terms. Together, they compete for the same finite pool of partner time, staff hours and client attention.

Against that backdrop, the FAR simplification is a small but meaningful signal. It suggests regulators are willing to revisit whether every reporting element still delivers proportionate value. For a profession that has long argued for better consultation and clearer design, that is a principle worth reinforcing.

Key TakeawayRegulatory simplification is most valuable when it removes administrative detail without diluting accountability. Advisers should help clients distinguish between the two, and should push for the same discipline in new reforms.

The Wider Pressure on Accountability and Governance

Simplification in one framework sits uneasily beside growing scrutiny of firms and professional conduct elsewhere. Reporting from Accounting Times notes that Crown Resorts is ending its six-year auditing engagement with KPMG Australia, following similar decisions by other major corporate clients. The reported concerns centre on audit misconduct and information handling.

The lesson for mid-sized and large practices is that client confidence is built on demonstrable governance, not on the volume of paperwork. When a major client exits an engagement, the question boards ask is rarely whether the firm met every reporting checkbox. It is whether the firm's internal accountability was clear, tested and credible.

This is where the FAR's logic offers a practical parallel. Accountability maps work best when they clearly identify who owns which decisions and how issues escalate. A practice that can answer those questions quickly, without a wall of administrative detail, is better placed both to satisfy regulators and to retain clients.

What Practices Should Review Now

The regulatory direction of travel suggests a few priorities for accounting leaders. The table below summarises the areas where simplification and scrutiny intersect.

AreaCurrent PressurePractical Response
Governance documentationRegulators are removing some reporting detail under FARAudit internal accountability maps for clarity over volume
Client retentionMajor clients are reviewing auditor relationshipsDocument escalation paths and conduct controls
Cumulative reform loadTax, trust and AML changes arrive togetherBuild a single calendar of obligations across clients
Advisory scopeClients need guidance on overlapping regimesMap which regimes apply to each client and where they intersect

Practical Steps for the Coming Quarter

  1. Review client accountability documentation. Identify where existing governance records contain detail that no longer serves a regulatory purpose, and where gaps remain in ownership or escalation.
  2. Map overlapping obligations. Build a consolidated view of tax, AML/CTF and governance deadlines for clients that fall under multiple regimes.
  3. Strengthen conduct and information-handling controls. Recent client losses underline that reputational risk often starts with how information is managed.
  4. Engage in consultation. Practices and professional bodies should respond to draft reforms with specific evidence of compliance cost and practical workability.
  5. Brief partners on the principle. Ensure leaders understand why proportionality matters, so they can argue for it credibly.

A Template for Better Regulatory Design

The most useful takeaway from the FAR change may be the method rather than the detail. Regulators reviewed a specific reporting requirement, asked whether it added value, and removed the parts that did not. That is a repeatable test. Accounting professionals can apply the same discipline to their own processes, asking of every internal report and client deliverable whether it serves a clear purpose or has simply accumulated over time.

Practices that adopt this mindset will be better equipped for a regulatory landscape that is unlikely to slow. They will also be more persuasive when they advocate for reform, because they will be arguing from evidence of what works rather than from general complaints about burden.

Looking Ahead

The FAR simplification is modest in scope, but it demonstrates that regulators can revisit their own designs. Whether that becomes a broader pattern will depend on how the profession engages with consultation processes and how clearly it articulates the cumulative cost of reform. For accountants, the opportunity is to make the case that good regulation is not the same as more regulation. Subtraction, applied carefully, can strengthen accountability rather than weaken it. Practices that prepare now, by auditing their own governance and mapping their obligations, will be ready to benefit from that shift when it comes.