The International Federation of Accountants (IFAC) has published its initial views to the Monitoring Group Consultation Paper on changes to the international audit and ethics standard-setting process.
The Monitoring Group, which consists of a number of international financial institutions and regulatory bodies committed to advancing the public interest in areas related to international audit standard setting and audit quality, last month published a consultation paper proposing to change the current standards setting model on the basis that standards were not developed fully in the public interest. IFAC said it agreed with some aspects of the paper, including the introduction of a multi-stakeholder model, broad geographical representation, sufficient checks and balances as well as a review of the nominations process.
However, IFAC highlighted its concern about the fact that the consultation paper offers no evidence for such a drastic change and that fundamental key issues are omitted from it or deferred, including: funding, oversight and governance, transition process, and an impact and risk assessment.
In its position paper, IFAC list seven possible reforms which would strengthen the current standards setting model as an alternative to the changes advocated by the Monitoring Group.
These reforms include:
- The introduction of nominations arrangements that comprise other stakeholder groups;
- That the role and operating processes of the PIOB be clarified and followed;
- A more explicit multi-stakeholder standard-setting board composition;
- Funding arrangements to which all stakeholder groups contribute, with transparent and independent oversight;
- Reconsider the optimum size of the standard setting boards, suggesting that it could be smaller;
- Retain separate standard-setting boards for auditing and assurance, and ethics for the entire accountancy profession;
- Examine the scope to redesign processes and operations of the standard-setting boards for greater efficiency and effectiveness.
Meanwhile, the Monitoring Group welcomes all feedback from stakeholders, to be submitted by 9 February 2018, the consultation is available here.