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Auditing, Oversight and Quality Assurance
 

Auditing, Oversight and Quality Assurance

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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