RECENT DEVELOPMENTS DECEMBER 15, 2017
An Accounting Today article published December 14 examined International Federation of Accountants' CEO Russell Guthrie concerns about a proposal by international securities, banking and other regulators ("the Monitoring Group") to restructure the IFAC's ethics and auditing standards boards.
Guthrie stated that the IFAC agrees with certain aspects of the Monitoring Group's consultation paper, "Strengthening the Governance and Oversight of the International Audit-Related Standard-Setting Boards in the Public Interest", including review of the nomination process and ensuring sufficient checks and balances, but outlined the following concerns:
- The Monitoring Group's focus on auditors of listed entities, as opposed to the Boards' current approach of writing professional standards for all types of companies (public, private and other) and accountants (public practice and in business or academia, etc.).
- Aspects of the paper do not accurately describe how the IFAC Boards work.
- The proposal is based on "thin" evidence, appears to have been driven by discussions with relatively few people and is not based on a cost/benefit assessment.
- Adoption of the IFAC ethics and auditing standards in more than 120 jurisdictions (in many cases through legislation). Note: though not officially adopted in the US, the Boards' standards significantly influence the AICPA standard-setting.
On the last point, the IFAC is particularly concerned that the enormous progress they've made in the past 15 years in terms of wide-scale adoption of the Board's ethics and auditing standards may be at stake if the Boards are restructured as proposed by the Monitoring Group.
Comments on the Monitoring Group Paper are due by February 9, 2018.