Australian Securities and Investments Commission (ASIC) Chairman James Shipton has stood aside and Deputy Chairman Daniel Crennan has resigned following revelations relating to relocation expenses paid to the pair.

Mr Shipton was paid $118,000 for tax advice when he moved from the US to Australia to take up the ASIC position in 2018, while Mr Crennan received $70,000 in housing cost payments the following year following his relocation from Melbourne to Sydney.

An investigation will be carried out and Mr Crennan announced his resignation today, saying he had been due to retire in July anyway. Mr Shipton says he will stand down while the inquiry is carried out, but commentators suggest it will be hard for him to return.

The Australian National Audit Office (ANAO) says in a letter to Treasurer Josh Frydenberg that the payments “may exceed the limits set in the remuneration determination made by the Remuneration Tribunal”.

In relation to the payments to Mr Shipton, the ANAO says it “also identified instances where the Commonwealth procurement rules were not followed” and “appropriate governance mechanisms were lacking”.

The ANAO recommends ASIC carries out a review of relevant processes, and Mr Frydenberg confirmed on Friday that Treasury will undertake an independent review, to be completed by the end of the year.

“Following the review, Treasury will advise me on the findings of the review and any further course of action that may be appropriate.”

Mr Shipton says in a statement that ASIC accepts the ANAO recommendations and that he will stand aside while the review is carried out.

He says Mr Crennan’s payments ceased “following his request” and that he offered and agreed to repay them. Mr Shipton will also “voluntarily reimburse” the payments made to him.

“ASIC acknowledges the processes supporting the approval of these relocation expenses were inadequate and, given the high standard ASIC holds itself to, it is disappointed that such situation has occurred,” the statement said.

“ASIC acknowledges that action in relation to this matter, first raised in the ANAO’s 2018-19 Closing Report, should have taken place more promptly.

“I have advised the Treasurer this afternoon that, in the circumstances, it is appropriate to stand aside pending the outcome of the review.

“While I believe that I have acted properly and appropriately in this matter, I hold myself to the highest possible standard.”

Deputy Chairman Karen Chester will be Acting Chairman while the review takes place.