Post on 31-Dec-2015
description
1 June 2000 Hong Kong
Role of Disclosure in Strengthening Corporate Governance and Accountability
Regulation of the Audit Profession
Tsuguoki Fujinuma
President
International Federation of Accountants (IFAC)
1 June 2000 Hong Kong 2
Introduction
• Regulators focussing on audit quality
• Self-regulation – the best way forward
• Action by the profession to ensure audit quality and relevance
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Regulators
• Focus on audit profession due to:– expanded information needs as a result of globalisation, IT etc
– high profile audit failures/Asian crisis
• Increasing involvement in audit profession:– endorsement of IAS by IOSCO
– proposed endorsement of ISA by IOSCO
– demands by regulators and IFIs for improved quality
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Self-regulation – the best solution
• National level:– government/regulators responsible for legislative framework
– professional bodies responsible for standard-setting, compliance, enforcement
• International level:– international legislation still at early stage
– international professional bodies responsible for standard-setting, compliance, enforcement
• Profession is being challenged to demonstrate its ability to:– meet expanded demands of capital markets
– undertake assurance standard-setting/enforcement roles
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IFAC and IASC
• Aim of IFAC/IASC– creation of transparent and comparable global financial and
auditing environment
• IASC– development, promulgation and review of IAS
– changes in governance, membership
• IFAC– broad standard-setting role (ISA, ethics, education, other areas)
– compliance review
– enforcement
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IFAC : International Standards on Auditing (ISA)
• Core of existing standards
• Existing level of acceptance and use
• Ensuring quality and relevance of standards
• New areas to be covered (derivatives)
• Other non-financial assurance areas (eg PFI, environmental reports, KPI)
• Their importance to decision-takers
• Benefits of international endorsement by IOSCO
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IFAC : Ethics
• Importance of independence of auditors
• New IFAC principles-based framework
• Consistency of approach with EU and USA
• Other guidance (MDPs, other services to audit client)
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IFAC : Education
• Particularly relevant to needs of developing nations
• IFAC’s proposed update of standard syllabus and IT components
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Commitments of Major Firms
• To support use of IAS
• To use ISAs in their audit procedures
• To ensure ethics rules comply throughout their networks using IFAC Code as minimum
• To provide greater education and training
• Closer working relationship with IFAC through membership of IFAC Forum of Firms– eligibility requirements
– membership obligations
– firmwide independent quality reviews
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Compliance, Monitoring, Enforcement
• Creation of independent Public Oversight Board• Obligations of IFAC’s 143 member bodies• Creation of IFAC Compliance Committee
– to review domestic introduction of IAS, ISA, other IFAC standards and guidelines
– to review monitoring and disciplinary procedures by profession bodies of their members
• Independent quality assurance reviews of firms through IFAC Forum of Firms
• Encourage adoption of standards through creation of International Forum on Accountancy Development (IFAD)
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International Forum on Accountancy Development (IFAD)
• Building accounting capacity and capabilities in developing and emerging countries
• Strengthening financial reporting and its credibility
• Membership from IFAC, practising firms, regulators, IFIs
• Benchmarking various aspects of financial architecture against international standards e.g. accounting, auditing, independence, corporate governance, disclosure requirements
• Support and assistance to “plug gaps”
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Conclusion
• Profession and firms taking significant steps to meet/exceed public expectations
• Harmonised and high quality accounting and auditing profession to support public and private sectors
• Working increasingly closely with regulators and IFIs towards this goal