Monitoring Group considers single board for ethics and assurance standards
15 Jan 2018
A roundtable discussion held by The Monitoring Group of its proposed overhaul of the global audit standard setting process revealed broad support for a potential restructure
15 Jan 2018
The proposals, put forward in November 2017, are under consultation until 9 February 2018 and are designed to improve and strengthen the independence of the standard setting process by removing the audit related standard setting activities from the profession following criticism of a lack of impartiality and independence. As a result, there are questions over the current standard setting structure and the involvement of the International Federation of Accountants (IFAC) and whether its role helps or hinders the process.
Speaking today at the roundtable, hosted by the ICAEW at Chartered Accountants Hall, The Monitoring Group chairman Gerben Everts recommended a board of new fewer than 12 members drawn from the profession, regulators and end users. ‘At least some’, he said, should be full-time, with executive-style responsibilities.
Several stakeholders, including those representing investors, believe it is important to retain some part-time presence on the board to help with diversity and prevent it from becoming isolated from stakeholders.
The hitherto unpaid nature of the work means that there is potential for conflict in terms of who is funding the work and time commitments, and as such, consideration is being given to remuneration for board members. In turn, future funding arrangements are also under consideration.
The options under consideration for The Monitoring Group’s structure are:
- One board, setting ethical standards as well as standards for audit and assurance
- Two boards, one responsible for setting ethical standards, with the other setting audit and assurance standards
- The Monitoring Group is also seeking views on whether IFAC should remain responsible for ethical standards
‘We have the utmost confidence in the standards that have been established until now,’ said FRC chief executive Stephen Haddrill.
‘But the world is changing around us,’ he said. ‘The audit profession is developing quite quickly with the introduction of new technology developing apace. It is also important to retain independence. Whether they are perceived or substantive, as a result of the public feeling that the profession has too strong a role in setting the standards that are there for the public and investor interest, responding as the The Monitoring Group is just now is timely.’
He added: ‘We haven’t yet concluded [on the best structure for The Monitoring Group]. We decided it best the governance of [The Monitoring Group] is fit for the future and to then look at the levels above it. We have asked questions about oversight as a whole, and we are still thinking about that.’
The closing date for comment is 9 February 2018 and responses should be emailed to MG2017consultation@iosco.org
Report by Calum Fuller