ASIC has released Consultation Paper 143 Expert reports and independence of experts: Updates to RG 111: Content of expert reports and RG 112: Independence of experts outlining proposals for guidance on independent experts’ reports.

CP 143 proposes additional guidance on the requirement for an expert’s report to be based on reasonable grounds.

The consultation paper sets out proposed updates to ASIC’s policies on the content of expert reports and the independence of experts. The paper attaches marked-up draft versions of Regulatory Guide 111 Content of expert reports (RG 111) and Regulatory Guide 112 Independence of experts (RG 112) that identify the proposed changes.

The paper follows a review by ASIC where it identified compliance issues including cases where experts:
(a) accepted an engagement despite serious concerns about their independence;
(b) adopted information provided by the commissioning company without conducting additional critical analysis;
(c) did not have a reasonable basis for their forecast financial information; and
(d) did not maintain sufficient working papers to demonstrate compliance with their obligations under RG 111 and RG 112.

ASIC is seeking comments on the proposals by 17 December 2010 and (subject to issues arising from the consultation process) plans to publish revised guidance to the market in March 2011.