This year is bringing accountants a host of new compliance challenges beyond tax law. In everything from cybersecurity to financial advice to financial crime, accountants and the finance industry will need to learn new ways to get business done.
1. Cybersecurity
The Institute of Public Accountants’ general manager of advocacy & emerging policy, Michael Davison, ranks cybersecurity as the industry’s number one non-tax compliance concern. That concern flows from businesses’ continuing decisions to store more data in the cloud – which is to say, on servers accessible from outside those businesses, through the Internet.
Davison says: “The really big issue for compliance is [that] we hold so much more client data nowadays … The people trying to obtain this information are becoming increasingly sophisticated, and their schemes are becoming increasingly sophisticated, like phishing and identity fraud.”
The move towards largely automated systems is creating “a constant challenge for practitioners” to protect information, Davison says. The biggest risk remains poor password behaviour, where people use – and businesses allow – overly simple passwords. More businesses still need to not just ask for but enforce use of good security practices, such as automated password generation and two-factor authentication.
“It’s a constant game of trying to stay ahead of the bad actors,” says Davison.
2. Climate reporting rules
New rules effective on 1 January 2025 demand that large Australian companies and financial institutions disclose their climate-related risks and opportunities. These rules now cover about 250 of Australia’s largest companies with assets of more than A$1 billion, as well as large institutions managing over A$5 billion in assets.
But as Michael Davison points out, the ambit of the rules will expand in the years ahead. By 1 July 2027, they are scheduled to include companies with $50 million in annual revenue or $25 million in assets.
And the effects of these rules extend further. Davison notes that smaller practitioners need to keep this in mind. “If they are providing services up the supply chain to the larger entities, or if they have clients who are providing services or product to the large end of the supply chain, they also may [need] to demonstrate how they meet the requirements – because the larger entities have to be able to demonstrate how all aspects of their supply chain meet the requirements,” he says.
3. Delivering Better Financial Outcomes reforms
Davison sees the Federal Government’s Delivering Better Financial Outcomes (DBFO) reforms as an attempt to lessen the generally increasing regulatory burden on financial advisers – a burden which has pushed thousands to leave the industry over recent years. [See What the DBFO package means for financial advisers]
In particular, the first tranche of DBFO has removed some of the compliance constraints and burdens on financial advisers. Financial services guides can now be offered online; clients can do an ongoing fee renewal without having an annual fee disclosure statement; you can use a single annual renewal date for all your clients. There’s much more clarity, Davison says, around when a superfund can deduct advice fees from a member’s account.
The second tranche of the DBFO reforms will arrive in early 2025. It is widely expected to eliminate Statements of Advice, and to let superannuation funds “nudge” members to examine their situation at key life stages. Davison sees it as an important step towards less compliance-based and more principles-based advice
4. Anti-money laundering and financial crime compliance
The first wave of anti-money laundering and counter-terrorism financing (AML/CTF) rules focused on financial institutions. The laws passed in late 2024 focus on “designated services” connected with client funds. They’re part of a globally agreed crackdown.
AUSTRAC, the AML/CTF regulator, says it is enlisting accounting practices in the fight against financial crime. How many practices? That’s unclear, but the IPA’s Davison suggests it could be three-quarters of all Australian firms.
Davison says accountants need to have systems in place to enable the new reporting regime. “They need to identify that they provide services that will be captured … They need to develop that program tailored to their business, tailored to their types of clients, tailored to specific services they provide. Then they start needing to do ongoing customer due diligence and where necessary report … and keep records of it all.”
He adds: “There’s going to be a lot of work for many practices to put these systems in place”.
5. Payment times reporting
This is one set of reforms that offers an opportunity to small businesses, Davison says. Laws introduced in 2021 by the Morrison government aimed to reduce the time larger businesses take to pay smaller firms.
So far, these laws appear to have had limited effect, he says. The Payment Times Reporting Regulator reported in January 2025 that in the first half of 2024, reporting entities said they made an average of 68.9% of small business payments within 30 days. That was up on the average of 63.2% when reporting commenced.
New guidance issued by the regulator, and new funds to the regulator in the 2024-25 Budget, may help to change that.
6. AI adoption
The sudden appearance of artificial intelligence (AI) has confirmed the automation of traditional accounting tasks is continuing, Davison says. That will push accountants towards the adviser role where they will in turn encounter new compliance obligations.
A 2024 Thomson Reuters survey of AI adoption in the US, UK, Canada, Australia and New Zealand found eight per cent of accounting firms were already using it and 13 per cent were planning to do so.
Legal compliance measures for AI took a step in 2024 with the Commonwealth Department of Industry’s Voluntary AI Safety Standard, which aimed to establish “guardrails” for ethical and responsible AI use. Davison says the IPA will be working with members this year on the ethics of using AI to help clients. AI use also revives attention on cybersecurity, he notes, because “we’re putting significant amounts of client data into the cloud when we use AI tools”.
Join the IPA and the Financial Advice Association Australia for the Federal Election Financial Services Summit as we analyse the current policies and politics in the lead up to this year’s Federal Election. You will hear from the Federal Member for Wentworth Allegra Spender MP, IPA General Manager Advocacy and Emerging Policy Michael Davison and FAAA CEO Sarah Abood on key financial advice profession policy questions. Register here now.
