IFIAR Urges Continued Audit Quality Improvement Efforts
In March 2021, IFIAR released its ninth annual survey of inspection findings arising from its member regulators’ individual inspections of audit firms affiliated with the six largest global audit firm networks.
Please click here to access the 2020 Inspection Findings Survey and related documents.
IFIAR mourns the untimely loss of Chair Frank Schneider
Relevant Papers and News Items (June – July 2020)
The Secretariat is pleased to provide below information and related links to items that are likely to be of interest to Members. This is a new initiative from the Secretariat and similar posts will be made regularly. Please visit the website frequently to read the latest news.
These links are shared for information and the awareness of IFIAR Members only. Any views and opinions expressed within are those of the authors and do not reflect any official policy or position of IFIAR.
- June 30: ASIC released new information sheets to help companies, company officers and company auditors understand and comply with their obligations under the corporate whistleblower protection regime.
- July 14: AFM published a new report on the big-4’s quality improvements efforts.
- Preconditions for the quality of statutory audits assessed
- The Big 4 are focusing on quality improvement and a quality-oriented culture
- Quality safeguards need to be strengthened
- New assessment to begin in 2020
- Improving quality is an important issue for society
- July 14: ACRA issued its latest report on Key findings from the third review cycle of the Financial Reporting Surveillanve Programme (FRSP)
- July 6: UK FRC announced FRC principles for operational separation of audit practices
- The objectives of operational separation, which is world leading, are to ensure that audit practices are focused above all on delivery of high-quality audits in the public interest, and do not rely on persistent cross subsidy from the rest of the firm.
- An implementation plan should be submitted to FRC by 23 October 2020.
- July 14: Monitoring Group published its Recommendations to Strengthen the International Audit and Ethics Standard-Setting System
- The Monitoring Group developed these recommendations through extensive outreach including the following:
- Issuance of a public consultation in 2017;
- Discussions with international audit and ethics standard-setting, oversight, and auditing professional stakeholders;
- Discussions held around the world with investors, regulators and other stakeholders; and
- Discussions within and among the Monitoring Group member organizations.
- Ref. IFAC Welcomes Next Phase of Engagement with MG (14 July)
- The Monitoring Group developed these recommendations through extensive outreach including the following:
- July 7: ASIC provided further information on focus areas for financial reporting in the COVID-19 environment for years ending 30 June 2020 following its guidance via the frequently asked questions already published on the ASIC website.
- June 30: CPAB published COVID-19 public company audit implications: cosiderations for audit committees
- July 1: JFSA published Notice Regarding the Disclosure of Corporate Information Concerning the Impact of the COVID-19 Infection in Quarterly Securities Reports (English version : July 30)
- July 5: JFSA published Q&A on the Disclosure of Narrative Information Regarding the Impact of COVID-19 Infection – Key Points for Better Disclosure for Investors
- July 2: UK FRC published a review of the policies and procedures auditors have been using during the on-going Covid-19 pandemic to assess whether companies are trading as a “going concern”.
- July 31: PCAOB Posted Conversations with Audit Committee Chairs: COVID-19 and the Audit
- June 26: IAASB published Covid-19 related guidance on auditing accounting estimates and related disclosures
- July 1: IAASB published Covid-19 related guidance on review engagements on interim financial information
- July 31:IAASB published IAASB Assists with Audit Considerations for the Impact of COVID-19
- July 15 : The European Securities and Markets Authority (ESMA) is to launch an assessment of the supervisory response in the financial reporting area by BaFin and the Financial Reporting Enforcement Panel (FREP) to the events leading to the collapse of Wirecard AG. It will be completed by 30 October 2020.
Ref: Wirecard: the timeline (Financial Times)
IFIAR Members discuss responses to COVID-19 with GPPC representatives
IFIAR Member regulators from around the world met by video conference on May 26 with representatives from the six largest global audit firm networks (GPPC*) to discuss the GPPC network’s responses to the COVID-19 crisis. The GPPC provided IFIAR Members with an outline of the challenges their networks and the companies they audit are facing in the area of financial reporting and audit due to the impact of COVID-19.
IFIAR Chair, Frank Schneider, noted the importance of the continued engagement between IFIAR and external stakeholders such as the GPPC going forward: “Continued engagement between all those involved in the financial reporting ecosystem is vitally important during these uncertain times. The GPPC outlined the challenges that are currently faced by preparers and auditors in a financial landscape that has been dominated by the impact of COVID-19 on businesses around the world, and the steps being taken in response. IFIAR continues to stress the importance of audit firms’ compliance with the relevant auditing standards during this crisis, as investors and other stakeholders depend more than ever on accurate information. IFIAR Members will continue to share information on how the regulatory environment is adapting to the crisis – and we are grateful to IFIAR Members and the GPPC for the continued dialogue in this respect”.
The IFIAR website has a dedicated page to provide the public with access to the latest information, updates and developments from IFIAR Members in response to the COVID-19 crisis. This page is accessed here.
*The Global Public Policy Committee (GPPC) is the global forum of representatives from the six largest accounting networks: BDO, Deloitte, EY, Grant Thornton, KPMG, and PwC, which has as its public interest objective the enhancement of quality in auditing and financial reporting.
IFIAR Chair’s Update on COVID-19 to stakeholders
May 1, 2020
IFIAR Chair’s Update on COVID-19 to stakeholders
This letter is to provide an update on IFIAR activity, and that of IFIAR Member organizations, considering the COVID-19 pandemic crisis.
Firstly, IFIAR as an organization has responded with a focus on the health and safety of our Members, staff and the general public by canceling all upcoming in-person meetings and moving to a work-from-home basis for the IFIAR staff. Despite this, IFIAR as an organization has, like our Members, adapted and remains operational and actively focused on supporting our Membership and stakeholders in the audit community in our ongoing work as well as the new challenges at hand.
I, along with the IFIAR Board, recognize that many auditors and other participants in the audit and audit oversight community may be facing practical difficulties in carrying out audits and audit oversight as a result of the COVID-19 pandemic. But as audit regulators we also recognize the importance of audit’s contribution to maintaining high quality financial reporting during this time and stress the need for audit firms to fully comply with required standards despite, and in light of, the significant impacts of COVID-19 – when investors and other stakeholders may have greater need for high-quality financial information than ever. Despite these new challenges, IFIAR will continue to fulfill its mission which is to serve the public interest, including investors, by enhancing audit oversight globally – including new activity developed in light of the COVID-19 situation. Such activity includes:
Information sharing for IFIAR members and the public
Many IFIAR Members and related regulators have issued announcements, statements and guidelines of import to the audit community during this crisis. Many public communications have been issued to draw the attention of auditors, companies and others to the audit, accounting and disclosure implications of the COVID-19 pandemic and its likely impact to audits of financial statements; as well as the related steps many regulators have taken, such as the extension of filing deadlines, temporary relief from on-site inspections, and the provision of timely updates to firms and stakeholders as to regulator expectations.
IFIAR has published dedicated COVID-19 pages on the IFIAR website to keep Members and the general public updated on such developments from across our Member jurisdictions and other relevant information in relation to the ongoing COVID-19 situation. (https://www.ifiar.org/about/covid-19-updates-public/)
A separate dedicated page for Members hosts further information of value to regulators.
Further, IFIAR’s Board held a conference call on April 16 dedicated to discussing the responses of Board Member organisations to the COVID-19 pandemic, to enable Board Members to learn and identify themes to share with the greater IFIAR Membership. The Board continues to closely monitor the evolution of the situation during its ongoing meetings.
Global Audit Quality Working Group (GAQWG) Liaison with the Global Public Policy Committee (GPPC) Networks
The GAQWG continue to interact with their GPPC counterparts to maintain dialogue and momentum regarding ongoing areas of focus for the working group; in addition to an immediate focus on new COVID-19-related issues that may be arising.
Officer/ Executive Director (ED) Liaison with the GPPC Leadership
The Officers and ED are holding periodic tele/video-conference calls with the GPPC Secretariat and Chair of the GPPC CEO Group; in addition to ad hoc calls with individual GPPC firm leadership to understand the challenges they are facing in completing audits in the current circumstances and the initiatives they are undertaking in response. During these interactions, the GPPC has been kept informed of the actions IFIAR has been taking to support its Members. The Officers and ED have reiterated the expectation for firms to comply with all relevant standards and perform high-quality audits.
Coordination with Standard Setters and other International Organizations
IFIAR continues to follow and comment on the work of the IAASB through IFIAR’s Standards Coordination Working Group (SCWG). In addition, the SCWG Chair is liaising with the IAASB and National Standard Setters (some of which are IFIAR Members with audit standard setting within their remit) to understand any responsive steps they may be taking.
IFIAR’s Officers and ED are also liaising with other international organizations to maintain open communication and information sharing, as appropriate.
Inspections: Members are adapting the practical aspects of their inspections of statutory auditors and audit firms to allow for continued activity under the recommended measures implemented by their respective governments. Remote working arrangements are in place for ongoing inspections in many jurisdictions and others continue to adapt their working arrangements to improve remote activity. In some cases, the timing of inspection activity is being adjusted or temporarily suspended to allow audit teams to focus on completing current audits.
Enforcement: Some Members are encountering obstacles to continued enforcement activity, particularly in respect of typical in-person activity such as conducting requisite in-person interviews or other meetings, or the taking of testimony (in jurisdictions where relevant) and are exploring remote arrangements for interviews and access to documentation.
Communication with national audit firms: A number of our Members have established regular contact with audit firm representatives at a national level in their jurisdiction to identify and understand key issues encountered by the firms in the current context, and the initiatives and processes implemented by the firms in response.
IFIAR recognizes the constraints experienced by, and additional pressures placed upon, all our stakeholders by the current circumstances. IFIAR’s efforts and methods to enhance audit oversight globally continues to adapt and evolve as a result and we will continue to update stakeholders through our website on these activities.
 Each of the Global Public Policy Committee (GPPC) networks is comprised of a group of legally separate firms operating locally in countries or regions around the world. The GPPC networks are represented by the following entities: BDO International Limited, Deloitte Touche Tohmatsu Limited, Ernst & Young Global Limited, Grant Thornton International Limited, KPMG International Cooperative, and PricewaterhouseCoopers International Limited.
IFIAR Update on COVID-19
IFIAR would like to assure our Members and stakeholders that we remain operational despite the impacts of the COVID-19 pandemic.
In response to the rapidly evolving Covid-19 situation globally and to ensure the health and safety of our Members, IFIAR staff and the general public the IFIAR Board made the difficult decision to cancel or postpone all in-person IFIAR meetings in March and to cancel the 2020 Plenary Meeting scheduled to take place in Zurich in April (including all related meetings and events). The Board will continue to closely monitor the situation and adjust future scheduled events accordingly.
As a result of the cancellation of the 2020 Plenary and other meetings, IFIAR is adopting alternate procedures to allow necessary Member business to proceed.
A collection of public information from Member jurisdictions on relevant developments relating to the COVID-19 situation is available here. A separate resource for IFIAR Members containing further information is also available in the Members-only area of the website (Members must be logged in to view).
IFIAR will continue to adjust our operations as necessary to allow IFIAR business to proceed during this challenging time.
If you have any questions about IFIAR activity you may contact the IFIAR Secretariat at firstname.lastname@example.org.
High-level guidance to Members on developing crisis management plans
A high-level guidance paper for Members to consider if they choose to develop a Crisis Management Framework, particularly in relation to an audit firm crisis in a Member’s jurisdiction, has been uploaded to the Members-only website.
Click here for the paper.
Cancellation of IFIAR In-Person Meetings – Alternative Arrangements will be made for the Annual General Assembly Meeting
Yesterday, February 27, 2020, the IFIAR Board made the difficult decision to cancel or postpone all in-person IFIAR meetings in March, and to cancel the April 2020 Plenary Meeting in Zurich (and all other side-meetings), in response to the rapidly evolving Covid-19 virus situation globally. The Board is of the view that the prudent approach, in line with many other organizations, to take this action for the health and safety of all.
Members will be contacted shortly with regard to alternative arrangements for the Annual General Assembly Meeting and we will seek alternative methods for providing Members with the information and updates they would have received at the Plenary.
IFIAR releases 2019 Inspection Findings Survey
In February 2020, IFIAR released its eighth annual survey of inspection findings arising from its member regulators’ individual inspections of audit firms affiliated with the six largest global audit firm networks. While encouraged by the downward trend, IFIAR urges the GPPC networks and their member firms to continue efforts to achieve improved audit performance as the current inspection findings rates remain high.
Please click here to access the 2019 Inspection Findings Survey and related documents.
IFIAR Observes 21% Decrease in Audits with Inspection Findings since 2015; Emphasizes Importance of Continued Improvement in Audit Quality
IFIAR has announced the results of a four-year initiative to reduce the number of audit files with at least one finding and agreed a new initiative with GPPC firms.
Click here to view the stakeholder announcement.
IFIAR comments on Audits of Less Complex Entities
IFIAR has published its comment letter on the IAASB’s project exploring the possible options to address the challenges in applying the ISAs in audits of less complex entities.
Click here to view the comment letter.
Norway FSA and Poland AOC join IFIAR MMOU
IFIAR is pleased to announce that the Financial Supervisory Authority (FSA) of Norway and the Audit Oversight Commission (AOC) of Poland have both joined as signatories to the IFIAR Multilateral Memorandum of Understanding Concerning Co-operation in the Exchange of Information for Audit Oversight (MMOU).
For more information on the IFIAR MMOU and a list of current signatories, please click here.
IFIAR comments on IAASB Exposure Drafts for ISQM 1, ISQM 2 & ISA 220
IFIAR releases 2018 Inspection Findings Survey
In May 2019, IFIAR released its seventh annual survey of inspection findings arising from its member regulators’ individual inspections of audit firms affiliated with the six largest global audit firm networks. While the downward trend in inspection finding rates is encouraging, the recurrence and level of findings reflected in the survey indicate a lack of consistency in the execution of high quality audits and the need for a sustained focus on continuing improvement.
Please click here to access the 2018 Inspection Findings Survey and related documents.
IFIAR 2018 Annual Report
2019 Plenary Meeting
Romania ASPAAS and Saudi Arabia CMA join IFIAR as new Members
IFIAR is pleased to welcome two new Members – the Authority for Public Oversight of the Statutory Audit Activity (ASPAAS) of Romania and the Capital Markets Authority (CMA) of Saudi Arabia. Please click here for our stakeholder announcement.
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.