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.
While IFAC agrees with some aspects of the Monitoring Group Consultation Paper, including the introduction of a multi-stakeholder model, broad geographical representation, sufficient checks and balances, and a review of the nominations process, it has concerns about far reaching proposals that would fundamentally dismantle the current model.
IFAC is also concerned that the consultation paper offers no evidence for such a drastic change and that fundamental key issues are omitted from the consultation or deferred, including: funding, oversight and governance, transition process, and an impact and risk assessment.
Additionally, aspects of the Consultation Paper do not accurately reflect the current standard-setting arrangements, and offer proposals that are contrary to the Monitoring Group’s stated aims.
As an alternative to the proposals in the Monitoring Group Consultation Paper, IFAC proposes changes, which further enhance the independence of international standard setting while retaining separate audit and ethics boards and allowing ethics standards to remain applicable to all professional accountants, including auditors. They reinforce a multi-stakeholder approach across all aspects of standard setting, including the Public Interest Oversight Board (PIOB) and Nominating Committee; clarify the role of the PIOB and enhance transparent, independent public interest oversight; and advocate for a funding model with contributions from all stakeholders. IFAC welcomes regular reviews of the standard-setting process that are in the public interest and ensure that the structures for international standard setting remain relevant in a changing world.
The Monitoring Group is considering all feedback from stakeholders. Comments should be submitted by Feb. 9, 2018 to: MG2017consultation@iosco.org.