Auditing, oversight and quality assurance Objectives and challenges
Goal of Statutory Audit Directive <ul><li>High-level harmonization of statutory audit requirements </li></ul><ul><li>Impli...
Range of issues addressed <ul><li>Strengthen consistency and credibility of the external audit </li></ul><ul><ul><li>Quali...
Principles of public oversight <ul><li>Covers all statutory auditors and audit firms </li></ul><ul><li>Governed by non-pra...
Choices in implementing public oversight <ul><li>Existing or new body </li></ul><ul><li>Composition and appointment of gov...
Conclusion <ul><li>No single model fits all circumstances </li></ul><ul><li>Statutory Audit Directive allows scope for var...
Auditing, oversight and quality assurance Objectives and challenges
Public oversight system governance <ul><li>Characteristics </li></ul><ul><ul><li>Governed by non-practitioners </li></ul><...
Why are the requirements needed? <ul><li>Recognition that the statutory audit is a public interest function </li></ul><ul>...
Some characteristics of public oversight <ul><li>Not readily defined in a few words </li></ul><ul><li>Gives stakeholders i...
Public oversight and quality assurance <ul><li>Oversight body must play a prominent role in QA system </li></ul><ul><li>Pu...
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Auditing, Oversight and Quality Assurance

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Auditing, Oversight and Quality Assurance

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

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