CANBERRA, AAP – The chair of Australia’s corporate regulator has been cleared of misconduct after an expenses investigation, but will still resign.

An investigation made no adverse findings against Australian Securities and Investments Commission chair James Shipton over $118,557 paid by ASIC for tax advice, which he repaid.

“In the light of the outcomes of the review, Mr Shipton will return to his role, but Mr Shipton and I have agreed it is in the best interests of ASIC that he will step down as chairperson of ASIC in the coming months,” Treasurer Josh Frydenberg said on Friday.

There will also be a shake-up of the regulator’s internal systems.

Mr Shipton went on paid leave after standing down when it was revealed taxpayers paid for his personal tax advice.

ASIC deputy chair Daniel Crennan quit in October after claiming almost $70,000 from taxpayers to cover rent, which he repaid.

No adverse findings were made against Mr Crennan.

Mr Frydenberg said after considering Dr Vivienne Thom’s report Treasury had sought legal advice, which satisfied him there had been “no instances of misconduct by Mr Shipton” or breaches of the code of conduct.

However, Dr Thom made a number of recommendations for improvements to ASIC’s internal practices, systems and processes that the government will take up.

These included internal audit management, quality assurance of legal advising processes and improving the management of and controls for spending relating to commissioners.

Dr Thom also noted concerns over the the proper use and management of public resources and internal control systems.

Mr Frydenberg thanked Mr Shipton, who will temporarily resume his job on Monday, for his three years of service.

“The Treasury will immediately commence a search process for a new chairperson,” Mr Frydenberg said.

“I intend to finalise the appointment within the next three months.”

Mr Crennan said in a statement he was pleased the report had made no adverse findings about him.

“The conclusions were consistent with my expectations at the outset of the review process,” he said.

“I will continue to contribute to the financial system in a private capacity as a consultant to the private and public sectors.”