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WOCCU Comments Included in IFAC’s Roadmap on Strengthening Accounting Standard Setting Process

WOCCU input is reflected in the International Federation of Accountants’ (IFAC) “Perspectives on the Way Forward for Strengthening the Oversight and Operations of the International Audit & Assurance and Ethics Standards Boards”, which provides a roadmap for developing high-quality international accountancy standards.

The Monitoring Group (MG) has been reviewing the international standard setting process since early 2015 and most recently published a consultation paper outlining possible actions. WOCCU provided input into this consultation urging inclusion of a “multi-stakeholder” approach to help the board develop standards that better serve the public interest and are relevant to all types of business enterprises including credit unions. 

The report is designed to set out perspectives on the way forward to strengthen the oversight and operations of the standards boards responsible for audit & assurance and ethics.  While this report does not include an agreed Public Interest Framework (PIF), it does provide a roadmap to advance consensus noting the following:

  • Broad support and agreement for a Public Interest Framework (PIF) is important to provide a firm foundation on which to base any significant changes to the model.
  • A multi-stakeholder approach to achieve consensus is essential; and
  • Improvements will need to be appropriately funded, but a new, viable, diverse funding model has not yet been proposed or agreed.

The report further notes that although the current process produces standards that are regarded as high quality and credible, improvements are needed in the following areas:

  • 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; and
  • Increasing the funding sources to support the proposed improvements above, and to ensure sufficient, sustainable, and preferably diverse funding for the future

A copy of the report can be viewed here.

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The Monitoring Group

WOCCU Urges Changes in Oversight of International Audit-Related Standard-Setting Boards

WOCCU filed its comment letter on the Monitoring Group’s proposal on Strengthening the Governance and Oversight of the International Audit-Related Standard-Setting Boards in the Public Interest

The Monitoring Group is a group of international financial institutions and regulatory bodies committed to advancing the public interest in areas related to international audit standard setting and audit quality. The members of the Monitoring Group are the Basel Committee on Banking Supervision, European Commission, Financial Stability Board, International Association of Insurance Supervisors, International Forum of Independent Audit Regulators, International Organization of Securities Commissions, and the World Bank.

WOCCU makes numerous suggestions for changes to the proposal as follows:

  • Supports increasing the independence of auditing standard setting from the accounting profession, but does not support issuing new auditing standards more frequently;
  • Urges the Monitoring Group to require standard setters to utilize quantitative cost benefit analyses as part of their consultative processes, and also to considering seriously the comments of community-based cooperative depository institutions, to help reduce regulatory burdens on financial cooperatives;
  • Supports the proposal for a “multi-stakeholder” international audit standard setting board that includes board members who are not accountants per se but have relevant industry experience, such as being a representative of a community-based depository institution trade association or a community-based depository institution prudential regulator;
  • Opposes the proposal that international standards be adopted through majority vote; 
  • Proposes reforming the auditing standard Consultative Advisory Group (CAG) by including a broader multi-stakeholder composition in the Consultative Advisory Group that would better serve the public interest by helping to develop standards that are more relevant and practical for a wider diversity of business enterprises, including cooperative depository institutions; 
  • Supports giving the PIOB authority to veto auditing standards or challenge technical judgments when doing so is necessary for the PIOB to discharge its responsibility to ensure that auditing standards are in the public interest; and 
  • Supports retention of the Monitoring Group’s current oversight role over how international audit-related standards are developed. 

 A copy of the letter can be viewed here.

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The Monitoring Group

Monitoring Group Seeks Input on Reforms to Global Audit Standard Setting

The Monitoring Group, consisting of public authorities responsible for monitoring the international audit standard-setting process (the International Organization of Securities Commissions (IOSCO), the Basel 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)), has issued a consultation paper setting out options to enhance the independence, relevance and transparency of international audit standard setting in the public interest.

The consultation paper focuses on the governance and structure of the Standard Setting Boards (SSB) that support auditing as a public interest activity, namely the International Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants. The proposal is far-reaching, setting out the main areas of concern regarding the current structure and considering, among other matters, the number, remit and size of the SSBs and their staffs; the accountability of the SSBs to International Federation of Accountants (IFAC); the process for nominating members to the SSBs; the roles of the Public Interest Oversight Board and the Monitoring Group; and the means by which the structure is funded.

Comments on the Consultation are due February 9, 2018 and can be viewed here.

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Bank of International Settlements, The Monitoring Group