Auditors referred to the corporate watchdog could avoid public scrutiny by resigning before an investigation is complete, a Senate committee has heard.
The inquiry into consultancy ethics previously received evidence from the Tax Practitioners Board that those under investigation could not resign to avoid a black mark against their name.
For example Peter-John Collins, the partner at the centre of consulting giant PwC's tax advice scandal, was unable to seek that path out.
However, Australian Securities and Investments Commission CEO Warren Day confirmed to the inquiry on Friday that auditors could still exploit this loophole and later go on to take up a corporate executive position.
"There will be some auditors who will just resign in the face of, or after we've indicated to them that we might do something," he said on Friday.
"(Then) it's decided that it's probably not the best use of taxpayers' money that we continue in front of the board.
"Sometimes you need a black mark or deterrence factor ... sometimes we have to weigh up whether or not that's needed because what we want is that person not to practice anymore."
Of the 41 auditors who came to ASIC's attention, 27 had resigned.
While these are on record, a resignation is not necessarily a finding of wrongdoing.
Labor senator Deborah O'Neill said it posed issues for accountability and made it difficult to distinguish the "goodies and the baddies".
"It keeps everything private, behind a veil - because if you decide to contest then things become a little more public," she said.
"So if you want to keep your job in the sector, there's an incentive for you to resign if you're caught doing the wrong thing.
"You could still be on a pathway to become the CEO of PwC or KPMG or EY or Deloitte - there is no impediment to that path for your career."
While Mr Day said those companies had their own diligence processes when selecting for leadership roles, Senator O'Neill said there was not enough transparency.
"(They hire) inside a partnership model that is now known to the public, they do it with a significant profit motive," she said.
"They do it in a way that makes the quality of audit more likely to be a casualty."
