Regulator Audit Framework

Productivity Commission submission

This paper was released on 19 March 2014 and provides a framework for auditing the performance of regulators.

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Summary
Contents

The framework set out in this paper provides guidance for auditing the performance of regulators in regard to the compliance costs they impose on business and other regulated entities. It complements other frameworks that are used to assess the performance of regulators in regard to their efficiency and effectiveness, and processes for ex ante assessment of the impact of proposed regulations. The framework should be applied within institutional arrangements that establish the authority, resources, and mechanisms to hold regulators to account.

For audits to improve regulator performance in this regard they need to:

develop an audit plan in consultation with business and other stakeholders. This document should set out how the regulator will reduce compliance costs (good practice indicators), and how their achievement of this objective will be assessed (metrics)
reward good performance and sanction poor performance
comply with, and report against, the high level principles for good performance
be public documents, with the audit plans and reports made available on the regulator's website.

In order for the audits to be undertaken in an effective and efficient way they should:

focus on the principles and particular areas of regulator behaviour that have the greatest effect on the cost of compliance for businesses they regulate - these will differ across regulators
select good practice indicators that best reflect regulator behaviour that minimises compliance costs while still achieving the objectives of the regulation
provide metrics at the highest level possible to demonstrate the satisfaction of the principle or indicator, utilising data and information from existing sources where available
require auditors to 'triangulate' information in forming a view of the satisfactory achievement of a principle
be included as a separate module in external audits that examine broader areas of performance of the regulator and regulation.

As part of the broader system that promotes regulation reform and reduces regulatory burden, oversight is needed to:

ensure that audit plans are prepared and that both plans and audit reports are published
coordinate the development of audit plans and audits to minimise the costs to business of participating in the process, and prioritise resources to where the potential for improvement is greatest
facilitate feedback on the quality of the regulations and need for reform
publish a report card facilitating comparison of the performance of regulators and lessons on approaches that have worked well in reducing compliance costs.

Background information

Jenny Gordon (Principal Adviser Research) 02 6240 3296

Preliminaries
- Cover, Copyright and publication details.
Chapter 1 Introduction
Chapter 2 Regulator audit framework
- Principles and indicators of good regulator practice
- Gathering evidence
Chapter 3 Institutional arrangements for implementing the framework
- Current institutional arrangements
- Options for implementing the framework
References

Printed copies

This publication is only available online.

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