Auditing, Oversight and Quality Assurance
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Auditing, Oversight and Quality Assurance



Presentation by John Machrae

Presentation by John Machrae



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Auditing, Oversight and Quality Assurance Auditing, Oversight and Quality Assurance Presentation Transcript

  • Auditing, oversight and quality assurance Objectives and challenges
  • Goal of Statutory Audit Directive
    • High-level harmonization of statutory audit requirements
    • Implications
      • More stringent requirements are permitted
      • Choices have to be made in implementation
    • Commission recommendation
      • Quality assurance for auditors of public interest entities (PIEs)
  • Range of issues addressed
    • Strengthen consistency and credibility of the external audit
      • Qualifications to be a statutory auditor
      • Characteristics of a statutory auditor
      • Performance standards
      • Transparent information about statutory auditors
      • Independent quality assurance
      • Public oversight of statutory auditors
    • Commission Recommendation supplements Directive
      • Addresses expectations for quality assurance for audits of public interest entities
  • Principles of public oversight
    • Covers all statutory auditors and audit firms
    • Governed by non-practitioners with relevant knowledge
      • Minority of practitioners permitted
      • Independent and transparent nomination process
    • Ultimate responsibility for:
      • Approval and registration
      • Adoption of standards (auditing, ethics & quality control)
      • Continuing education
      • Quality assurance
      • Investigations and discipline
    • Transparency
    • Funding that is free of inappropriate influence
  • Choices in implementing public oversight
    • Existing or new body
    • Composition and appointment of governing body
    • Scope of oversight
    • Who conducts quality assurance inspections
    • Required range of disciplinary sanctions
    • How should funding be secured
    • Level of funding required
    • Size and composition of staff
    • Level of transparency
    • Relationship with financial supervisors
  • Conclusion
    • No single model fits all circumstances
    • Statutory Audit Directive allows scope for variation
  • Auditing, oversight and quality assurance Objectives and challenges
  • Public oversight system governance
    • Characteristics
      • Governed by non-practitioners
      • Knowledgeable in areas relevant to statutory audit
      • Minority of practitioners permitted
  • Why are the requirements needed?
    • Recognition that the statutory audit is a public interest function
      • Reliable audits contribute to efficient functioning of markets
      • Broad range of interests rely on the auditor’s work
    • Regulatory framework should reinforce the public interest
      • How credible is pure self regulation by a private body?
      • Does the audit profession itself need public oversight?
  • Some characteristics of public oversight
    • Not readily defined in a few words
    • Gives stakeholders in audit profession’s product a role in its governance
    • Government agencies should consider their role
    • Governed by knowledgeable non-practitioners
    • Balance between audit knowledge and independence
    • Adequate funding that preserves independence
    • Supported by appropriate expert staff
    • Oversight body must have real authority
    • “ Ultimate responsibility” for oversight of key functions
    • System should be transparent and accountable
  • Public oversight and quality assurance
    • Oversight body must play a prominent role in QA system
    • Public oversight and effective QA are inextricably linked
    • Non-practitioners can bring valuable insights to the QA system