IFIAR releases Report on Survey of Audit Regulators’ Enforcement Regimes

IFIAR releases Report on Survey of Audit Regulators’ Enforcement Regimes

IFIAR has released a Report on its Survey of Audit Regulators’ Enforcement Regimes.

The Report underscores the extent to which IFIAR members have the authority to respond to auditor misconduct and enforce compliance with the rules, laws, and standards that govern the audit profession in different parts of the globe.  The results recognize the unique and critical role that enforcement plays in audit oversight.

Please click here for the Press Release and here to access the Report.

AFM issues report on Vulnerabilities in the Structure of the Audit Sector

AFM issues report on Vulnerabilities in the Structure of the Audit Sector

The AFM has conducted a preliminary study into vulnerabilities in the structure of the audit sector and issued a report to contribute to the debate on sustainable and consistent audit quality.

An English translation of the press release can be found here. An English translation of the report’s Summary and Conclusions can be found here.

IFIAR welcomes the Philippine SEC as a new Member

IFIAR welcomes the Philippine SEC as a new Member

IFIAR is pleased to announce that the Philippine Securities and Exchange Commission (SEC) has joined as a Member of IFIAR. Please click here for our stakeholder announcement.

PCAOB invites public comment on Strategic Plan

PCAOB invites public comment on Strategic Plan

The PCAOB has invited the public to comment on its draft strategic plan covering the period 2018-2022. The PCAOB is proposing new goals and objectives, following its own careful study and a survey of the public and PCAOB staff. The draft Strategic Plan and further detail is available here.

FRC shares its recent efforts to monitor and manage risks to the public interest entity audit market

FRC shares its recent efforts to monitor and manage risks to the public interest entity audit market

As part of its enhanced approach to audit firm monitoring, the FRC has conducted two ground-breaking reviews on the risk management policies and procedures over information security and contingency planning on the six largest audit firms in the UK. A summary of the work performed is available here.

Marian Williams, Director of Audit at the FRC, explains the rationale for the reviews and the approach taken. If you would like to gain further insight, contact her on m.williams@frc.org.uk

FRC publishes Audit Culture Thematic Review

FRC publishes Audit Culture Thematic Review

The FRC has recently published the findings of a thematic review of the action being taken by firms to establish, promote and embed a culture that is committed to delivering consistently high quality audits. The press release and report are available here.

FAOA presents on IFIAR at the World Bank Group – Centre for Financial Reporting Reform (CFRR) Workshop

FAOA presents on IFIAR at the World Bank Group – Centre for Financial Reporting Reform (CFRR) Workshop

Dieynaba Diabaté and Martin Schmidt of the FAOA presented at the World Bank / CFRR workshop ‘Advancing Audit Quality Assurance Systems: Trends and Opportunities’ workshop in Vienna on 26-27 April. The FAOA provided the participants with a general update on IFIAR activities and workstreams, together with an outline of the benefits of joining IFIAR.

IFIAR Chair Brian Hunt interviewed by The Canadian Accountant on the “tremendous change” in the audit profession

IFIAR Chair Brian Hunt interviewed by The Canadian Accountant on the “tremendous change” in the audit profession

The Canadian Accountant has interviewed IFIAR Chair Brian Hunt to discuss the “tremendous change” occurring in the audit profession and how the future of audit will be very different to what it is today. A copy of the interview is available here.

IFIAR 2017 Annual Report

IFIAR 2017 Annual Report

IFIAR has released its 2017 Annual Report. Please click here to download the Annual Report.

2018 Plenary Meeting

2018 Plenary Meeting

The Canadian Public Accountability Board (CPAB) hosted IFIAR members in Ottawa, Canada’s capital city, for the 2018 Plenary meeting. Please click here for our stakeholder announcement.

An interview with IFIAR Chair Brian Hunt in the March/April issue of the ICD Director Journal

An interview with IFIAR Chair Brian Hunt in the March/April issue of the ICD Director Journal

An interview with IFIAR Chair Brian Hunt, which discusses the strides Canada has made in audit regulation and what still needs to be done, has been published in the March/April 2018 issue of the Institute of Corporate Directors (ICD) publication Director Journal. A copy of the interview can be found here.

EY Assurance Reporting interviews IFIAR Chair Brian Hunt

EY Assurance Reporting interviews IFIAR Chair Brian Hunt

IFIAR Chair Brian Hunt is the subject of a multimedia interview published in the EY Assurance insights hub, discussing the challenges of improving global audit quality and what the audit of the future will look like.

You can find the video and print interviews in the following link to EY’s page, here.

Standards Coordination Working Group (SCWG) – IFIAR Membership Briefing

Standards Coordination Working Group (SCWG) – IFIAR Membership Briefing

The SCWG met with representatives from IAASB and IESBA, led by IAASB Deputy Chair Megan Zietsman and IESBA Chairman Stavros Thomadakis on February 15, 2018 to obtain details of their current and future work plans and to discuss IFIAR’s key concerns.

The two days SCWG meeting was hosted by the PCAOB in Washington DC. SCWG member representatives attended from Canada, France (SCWG Chair), Germany, Japan, South Africa, the Netherlands, UK, and the USA, with the IFIAR Executive Director also in attendance. William D. Duhnke, Chair of the PCAOB Board, welcomed the SCWG.

The meeting covered the main current international standard setting projects, and the outcomes of the IFIAR 2017 Survey relevant from a standard setting perspective. WG Members prepared briefings on each of the projects on their respective agendas, focusing on whether standards are sufficiently clear and whether they sufficiently contribute to audit quality and the need for consistent execution of audits over the globe. The key messages from the briefings were discussed with IAASB and IESBA Board members, whereby it was made clear that the views expressed were the personal, staff level views of those attending, and that these were not formally approved views of individual members of IFIAR or of IFIAR as a whole.

Key areas of discussion with IAASB included:

• Auditing Accounting Estimates (ISA 540)

o The SCWG followed up on the IFIAR response to the ISA540 exposure draft. In particular, the IAASB was encouraged to provide further clarity on the work effort required, including when the auditor uses the work of a management expert, and to embed further drivers for the application of professional skepticism.

• Identifying and Assessing the Risks of Material Misstatement (ISA 315)

o The need for links between the revision of ISA 315 (expected to be proposed in June 2018) and the ISA 540 revision (which is expected to be adopted in June 2018), was stressed. The need for further clarity about the risk assessment process and the expected need for an understanding of controls were discussed; as well as the need for alignment with ISA 330 on responding to assessed risk.

• Quality Control (ISQC 1 – 2, ISA 220)

o IFIAR previously expressed support for the IAASB project to strengthen firm quality control processes and procedures relating to quality control and internal monitoring (see IFIAR June 24, 2016 letter). SCWG questioned about areas to be clarified.

• Group Audits (ISA 600)

o This continues to be an area of concern and IFIAR consider this standard as a priority area for review.

• Other topics:

o The IAASB proposal to start a project on audit evidence (ISA 500), including “data analytics” implications.
o Concerns were raised over the lack of consistent application of the current standard on materiality (ISA 320).
o Reliance on the work of management’s expert especially in the case of accounting estimates.

• Concerns were reiterated over the time needed for the IAASB to complete the current projects.

Key areas of discussion with IESBA included:
• Questions about the coming release of the restructured IESBA Code of Ethics.
• State of play regarding the adoption of the new NOCLAR (Non-Compliance with Laws and Regulations) requirements, applicable from June 2017.
• Discussion on the requirements relating to non-audit services and the link between fees and quality of the audit.
• IESBA’s plans to assess the potential non-audit services.
• impact of technological evolutions on auditors and professional accountants. IESBA were encouraged to liaise with IAASB on this topic.

After its meeting in Washington, the SCWG will continue to engage with IAASB and IESBA to understand how the areas of concerns shared by IFIAR members will be taken into consideration by both boards. Further conference calls have been arranged in March and May with members of the ISA 540 and ISQC 1 IAASB Task Forces.

IFIAR releases 2017 Inspection Findings Survey

IFIAR releases 2017 Inspection Findings Survey

In March 2018, IFIAR released its sixth annual survey of findings identified by its Members in their individual inspections of audit firms affiliated with six large, international audit firm networks. Although the frequency of findings from inspections of individual audit engagements has reduced on an overall basis compared to the last survey, progress is not experienced in all jurisdictions or at the same rate. Further, no definitive trends have been noted for findings arising from inspections of firm-wide systems of quality control. These results affirm IFIAR’s views that the global networks must continue in their efforts to strengthen their systems of quality control and drive consistent execution of high quality audits throughout the world.

As described in recent survey reports, IFIAR has challenged the networks to reduce the percentage of listed PIE audits that have inspection findings by at least 25% on an aggregate basis, across the global networks’ member firms within the GAQ Working Group members’ jurisdictions, over a four year period using the 2015 survey results as a baseline. This report reflects the networks’ progress at the measurement period’s mid-point.

Please click here to access the 2017 Inspection Findings Survey and related documents.

1st AFIAAR meeting heralds new focus on independent accounting and auditing regulation in Africa

1st AFIAAR meeting heralds new focus on independent accounting and auditing regulation in Africa

Independent audit regulators and those professional accounting bodies that are responsible for oversight and audit standard setting from Botswana, Ethiopia, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Tanzania, South Africa and Zambia joined the Public Accountants and Auditors Board (PAAB) of Zimbabwe for the inaugural meeting of the African Forum of Independent Accounting and Auditing Regulators (AFIAAR) at the historic Victoria Falls Hotel on March 1 and 2, 2018.

The establishment of the Forum is intended to formalise efforts for collaboration and the strengthening of independent auditing, and where relevant, accounting regulation across the continent by formalising a common base and one voice from which to advance audit regulatory activities as it relates to building capacity, increasing audit quality, and influencing and adopting international standards.

The event was co-hosted by the PAAB Zimbabwe and the Independent Regulatory Board for Auditors (IRBA) of South Africa, which CEO, Bernard Agulhas also represented the International Forum of Independent Audit Regulators (IFIAR) in his capacity as an IFIAR Board Member.

IFIAR is a global body of 52 independent audit regulators of which four countries in Africa, being Botswana, Egypt, Mauritius, and South Africa, have attained levels of independent regulation and oversight of auditors which makes them eligible for membership. This initiative is endorsed by IFIAR as a means to strengthen audit regulation in Africa and develop regulatory and legislative provisions in African countries to a level where they can attain international membership to the global forum.

Says Admire Ndurunduru, CEO of the PAAB (Zimbabwe): “Throughout the world, independent audit regulation plays a critical role in building confidence in capital markets and providing confidence to investors in the quality of financial reporting. In the context of the development of our continent, this is a momentous initiative for Africa as it will be one of the keys to increasing investment in our economies, public protection and contributing to the development of the continent.”

The members concluded the event with a unanimous adoption and signing of The Charter to formalise the establishment of AFIAAR with eleven founding members. Zimbabwe was elected as chair, represented by Admire Ndurunduru of the PAAB as chairman; South Africa as vice-chair, represented by Bernard Agulhas of the IRBA; and Ethiopia was elected as Third Officer, represented by Gashe Desta Yemane.

Issued by: Lorraine van Schalkwyk APR
On behalf of: African Forum of Independent Accounting and Auditing Regulators

IFIAR Board responds to Monitoring Group Consultation Paper

IFIAR Board responds to Monitoring Group Consultation Paper

On November 9, 2017 the Monitoring Group issued the consultation paper Strengthening the Governance and Oversight of the International Audit-related Standard-setting Boards in the Public Interest, which set out various options to enhance the governance, accountability and oversight of the international audit standard setting process.

The IFIAR Board has submitted a letter to the Monitoring Group in response to the consultation paper, in which the Board expresses its support for the reform initiative. A copy of the letter is available at the link below.

IFIAR Board letter to Monitoring Group

Monitoring Group Consultation Paper

Monitoring Group Consultation Paper

The Monitoring Group has issued a consultation paper setting out various options to enhance the governance, accountability and oversight of the international audit standard setting process.

The consultation will run until 9 February 2018.

Monitoring Group Consultation Paper
Monitoring Group Consultation Paper - Press Release

Rising to the Transparency Challenge

Rising to the Transparency Challenge

As they continue efforts to enhance transparency and disclosure practices, policymakers face a daunting task, writes CAQ Executive Director Cindy Fornelli, highlighting three recent instances of regulators rising to this transparency challenge.

https://www.linkedin.com/pulse/rising-transparency-challenge-cindy-fornelli

Big six audit quality lacks consistency

Big six audit quality lacks consistency

The quality of FTSE 350 audits is improving but the Big Six still have a significant amount of work to do if they are to meet the Financial Reporting Council’s target of 90% requiring no more than limited improvements by 2018/19.

http://economia.icaew.com/en/news/june-2017/big-six-audit-quality-lacks-consistency

The CPA’s Role in Addressing Cybersecurity Risk

The CPA’s Role in Addressing Cybersecurity Risk

The CPA’s Role in Addressing Cybersecurity Risk outlines how the auditing profession can help companies and the capital markets address the growing challenges of cybersecurity. The paper explores the challenging cybersecurity landscape, one in which organizations face varying cyber-threats and impacts — all in an environment marked by rapid technological change.

http://thecaq.org/cpas-role-addressing-cybersecurity-risk