The International Federation of Accountants (IFAC) released a white paper “Perspectives on the Way Forward for Strengthening the Oversight and Operations of the International Audit & Assurance and Ethics Standards Boards” on August 28, which responds to suggestions made by the Monitoring Group in its November 2017 consultation paper on “Strengthening the Governance and Oversight of International Audit-Related Standard-Setting Boards in the Public Interest” (see sbr 1/18). The public perception of IFAC’s independence in its standard-setting process was questioned in the Monitoring Group’s paper. IFAC’s paper now offers recommendations for a new oversight body. Funding for implementing IFAC’s proposals, which could cost an additional $7,000,000 -11,000,000 per year, “is a challenge and there is no certainty it would be forthcoming,” IFAC observes.

The Monitoring Group consists of: the International Organization of Securities Commissions (IOSCO), the Basil Committee on Banking Supervision (BCBS), the European Commission (EC), the Financial Stability Board (FSB), the International Association of Insurance Supervisors (IAIS) and the World Bank Group (WBG).

The Monitoring Group expects to release a Public Interest Framework toward the end of 2018 on which to base any significant changes to the standard-setting model. IFAC is recommending that steps be taken before what they estimate could be a three-year process to have an agreed upon framework.

“An overall, integrated approach that focuses first on clarifying the composition and roles of the oversight body, and then making changes to the standards boards, is the best way to try to access the increased, sustainable and secure funding required to address the necessary improvements,” the IFAC paper states. “These improvements include enhanced staffing, more efficient board processes, better use of technology and remuneration for board members. In the absence of additional sustainable funding, it is unlikely that these changes can be successfully implemented.”

The “next steps” set out by IFAC to strengthen the oversight and operations of the international audit and assurance and ethics standards boards are:

  • Clarifying the distinct roles between oversight and standards development.
  • Enhancing multi-stakeholder representation on both the oversight body and the standards boards.
  • Improving the timeliness of standards development while retaining their quality and relevance; focusing on standards related to auditor performance; quality management within firms; the implications of new accounting standards; and emerging areas of reporting and new technology.
  • Addressing the perception that the accountancy profession is able to exert undue influence.
  • Increasing the funding sources to support the proposed improvements above and to ensure sufficient, sustainable and preferably diverse funding for the future.
  • Related News

    Full Issue