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27 July 2011

Audits to be enhanced by new set of principles

 

Published: 2011/07/27 08:10:09 AM

SANCHIA TEMKIN

 

A CORE set of principles recently adopted by the International Forum of Independent Audit Regulators will promote investor confidence and improve the quality of audit practices worldwide.

 

This comes in the wake of different legal and regulatory structures internationally, which have made effective co-operation between audit regulators globally difficult. The core principles are aimed at fostering high-quality audits and promoting public trust in the financial reporting process.

 

Bernard Agulhas, CEO of SA's Independent Regulatory Board for Auditors, said yesterday: "Serving the public interest and providing investor protection is the key objective of members at the International Forum of Independent Audit Regulators. "Improving audit quality is the means to achieve these objectives."

 

"The adoption of the principles will further enhance the current regulatory framework that was established by the Auditing Profession Act in 2005," said Mr Agulhas. An effective regulatory system required certain prerequisites, he said. "SA is fortunate in that it has a well-developed legal and corporate governance framework."

 

Such a framework includes well- defined accounting and auditing standards, legal backing for the preparation of financial statements in accordance with internationally accepted standards, an enforcement system for noncompliance, a well- established corporate governance structure and educational requirements for auditors and accountants. "This is not necessarily a given," said Mr Agulhas. "In addition to this, significant changes seen in the regulatory environment since 2003 had resulted in a disparity between audit regulators globally."

 

He pointed to the case of the Public Company Accounting and Audit Oversight Board and its requirements with regards to non-US firms auditing US-listed companies.

 

The introduction of the core principles by the international forum for auditors was a step towards increased international co-operation and consistency between audit regulators internationally, he said.

 

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