Monitoring Group says widespread support for audit standards reform

The Monitoring Group is to push ahead with proposals for reform of the way in which audit standards are set globally, including steps to make the process independent of the audit profession, saying feedback to its consultation has revealed widespread support for some, but not all, of its proposals

There were 179 responses to the consultation, Strengthening the Governance and Oversight of the International Audit-Related Standard-Setting Boards in the Public Interest, with the Monitoring Group reporting strong backing for reforms to increase accountability and transparency in standard setting; to move to a multi stakeholder representation in the standard setting boards; and to a sustainable, more independent funding model.

However, there were more diverse views on the optimum number of standard setting boards, their composition, and whether reform of the Public Interest Oversight Board (PIOB) should be carried out at the same time as reform of the boards.

There was also disagreement over how to accomplish reforms most effectively and efficiently, and whether reform should be carried out on a staged basis or not.

The Monitoring Group said its analysis of responses suggested users of the financial statements (including investors), public authorities (including audit regulators) and audit firms are all supportive of the need for reform in the areas identified in the consultation, and endorsed measures to better represent the public interest in standard setting and make more of the standard setting process demonstrably multi-stakeholder.

These stakeholders were also supportive of the options to make the standard setting board or boards more strategic in focus, and also smaller in size. Investors and public authorities also endorsed measures to better represent the public interest in standard setting and make the standard setting process demonstrably and fully independent of the accounting and audit professions.

The International Federation of Accountants (IFAC) member bodies also agreed with the high-level objectives of the review but did not support many of the substantive options proposed.

Gerben Everts, Monitoring Group chair, said: ‘The broad support received for the objectives set out in the consultation is a clear indication that reform of audit-related standard setting globally is needed.’

The Monitoring Group now plans to undertake further outreach with global stakeholders, with a view to developing a comprehensive white paper of reform proposals for consultation by the end of the year. This will incorporate a public interest framework, proposals on funding, an impact assessment and transition plan.

Monitoring Group summary of feedback is here.

Report by Pat Sweet

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