Treasury is considering handing the corporate regulator the power to punish major audit and consulting firms for the first time, as part of a crackdown on the sector proposed after PwC was caught circulating confidential government tax details to promote its services.

Officials are also considering a second course of action – taking all power to oversee auditors away from the Australian Securities and Investments Commission and handing it to another regulator, known as the Financial Reporting Council, made up of existing industry boards.