Johannesburg, Tuesday, June 12, 2018 – The Independent Regulatory Board for Auditors (IRBA) has welcomed the publication of the feedback from The Monitoring Group’s initial consultation process into strengthening the governance and oversight of the international audit-related standard-setting boards in the public interest. The IRBA is in support of reforms which will see the global standard-setting boards increase their independence from the profession, become more representative of the ultimate beneficiaries of high audit quality and increase the public interest focus in the work of standard setters.
Published on Monday 11 June, the paper outlines the feedback received from 179 respondents representing audit firms, the International Federation of Accountants (IFAC) and its member bodies, national standard setters, public authorities (including regulators), academia, users, investors, and the international standard-setting boards themselves. In general, given the increasing focus on independence and the public interest role of auditors, the Monitoring Group has indicated that there is sufficiently broad support for reform for it to embark on the next step. It will now develop a White Paper around global standard setting reforms, which will include proposed solutions, funding, and transitional arrangements, for a consultation process by the end of this year.
Says Bernard Agulhas, CEO of the IRBA: “The appetite for reform reflected in the preliminary stakeholder consultation results is encouraging. While there is resistance and some opposition to some areas proposed in the consultation paper, these do not detract from or discount the importance of independence and public interest, Concerns seem to revolve more around practical implementation issues.
“We are not saying that current international auditing standards are not relevant or appropriate. However, it is our view that reform in pursuit of stronger public interest is key in efforts to restore confidence in the profession. In the setting of global auditing standards, we believe that it is increasingly important that the interests and expectations of the ultimate beneficiaries of high quality audit services must be considered.
“We must aim to strike the right balance between the needs of the users of financial information and the due process, including timeliness, in responding to those needs.”
During the process, stakeholders, in particular investors, raised the concern that developing auditing standards in the public interest will be challenging without sufficient representation of investors, asset managers and analyst in the standard setting process. The current standard setting boards are seen, whether real or perceived, to be dominated by the profession itself.
Concludes Agulhas: “In the same way that audit regulators worldwide have sought to increase their own independence from the profession, in order to limit the influence of auditors in the oversight of auditing, so too is it logical that the next step is to secure the independence of the standard setters. The independence of the rule makers needs to be secured to ensure that the resulting auditing standards respond sufficiently to the stakeholders and users’ expectations and are able to enhance audit quality in the public interest. This, in turn, will secure confidence and trust in standards, audits and financial information.”
Find the Report and Consultation Paper:
More about the Monitoring Group:
With its origins rooted in the 2003 International Federation of Accountants (IFAC) Reforms, the Monitoring Group supports the development of high-quality international standards for auditing and assurance and accountant ethics and education. It is ultimately responsible for the overall governance arrangements in this field, and provides for ultimate accountability to public authorities responsible for furthering the public interest in audit quality and standard setting. More specifically, and to that end, it monitors how the Public Interest Oversight Board (PIOB) carries out its public interest role with particular regard to the PIOB’s oversight of the standard setting process.
More about the IRBA:
The IRBA is a public protection statutory body established to protect the financial interests of the public by ensuring registered auditors and their firms deliver services of the highest quality. It upholds audit firm independence to ensure that audit quality is such that it enhances the accuracy and credibility of financial performance reporting. In this way, the IRBA has an important role to play in building the reputation of South Africa as an investment market for both local and global investors and driving economic growth for the country.
The IRBA also registers suitably qualified accountants as auditors, who must adhere to the highest ethics standards, and promotes the auditing profession through the effective regulation of assurance conducted in accordance with internationally recognised standards and processes.