Transcript International Ethics Standards Board for Accountants Monitoring Group Report Ken Dakdduk Paris June 2010

International Ethics Standards Board for
Accountants
Monitoring Group Report
Ken Dakdduk
Paris June 2010
Monitoring Group (MG) Report
Project Status
• Monitoring Group issued Consultation Paper
June 10, 2010
• Response date August 15, 2010
• Final conclusions and associated report
November 2010
OVERSIGHT & CONSULTATION
KEY
ACCOUNTABILITY
OVERSIGHT
CONSULTATION/ADVICE
3
2003 IFAC Reforms
• Ensure that IFAC activities are responsive to
the public interest
– Increased transparency
– Greater public and regulatory input
– Increased dialogue with regulators
• Created the PIOB, IESBA CAG, and MG
Called for effectiveness review by MG five
years after formation of PIOB
4
Monitoring Group Composition
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•
•
•
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Basel Committee on Banking Supervision
European Commission
Financial Stability Board
International Association of Insurance Supervisors
International Organization of Securities
Commissions
• World Bank
• International Forum of Independent Audit
Regulators (observer)
MG Approach
• Whether the reforms were implemented
• Whether the manner of implementation
achieves reform objectives
• Whether original features of reforms are
conducive to credible standard setting today
• Whether new factors warrant a future review
MG Approach
• Reviewed self-assessments from IFAC and
PIOB
– Discussed with both
• Informal discussions/information gathering
– Members of IESBA CAG
– Some members of IFIAR
• Considered MG members’ experiences with
and observations of IESBA and CAG
Preliminary Conclusions
• Mix of Board member backgrounds [R1]
– Should meet the need for technical competence and
objectivity
– Parity, or perhaps a majority, of members with
professional career experience that goes substantively
beyond that of auditor
• Assignment of Board seats [R2]
– Current practice of Forum of Firms holding five seats on
the board should be discontinued
– FoF nominees should be considered with other nominees
Preliminary Conclusions
• Ability to attract public Board members [R3]
– IFAC should explore financial measures, such as
stipends, to accompany travel cost arrangements for
public members
• Setting a Code of Ethics for Accountants [R4]
– Considered whether it is necessary or desirable to have
same degree of practitioner involvement in setting
independence standards as in setting auditing standards
– MG will evaluate how expertise and perspectives of
those who are or have been auditors is best included in
setting ethics and independence standards and whether it
would be advisable to have an alternative structure, or
composition of IESBA
Preliminary Conclusions
• Role of Technical Advisors [R5]
– IFAC should change manner in which expert technical
information and support is made available to Boards
– Board members and not technical advisors are the
principals in the Board’s discussions, deliberations and
decision making
• Participation of members in meetings [R6]
– IFAC should institute a practice for Boards to invite TF
members and external guest speakers to regularly
conduct technical sessions for all Board members on key
issues on the Board’s agenda
Preliminary Conclusions
• Role of the CAG [R7]
– IFAC should revise manner in which CAG determines
agenda items, discussion matters are presented, input is
summarized and presented to Boards so that approaches
used do not appear to go beyond CAG’s technical
advisory role
• Meetings of the CAG [R8]
– IFAC should revise approach to CAG meeting content to
provide for more realistic and effective participation
approach on part of CAG members and to provide for
submission of final CAG minutes to Board members
before Board meetings in which discussed
Preliminary Conclusions
• Analysis of comment letters [R9]
– Change how comment letter input is summarized and
provided to Board members so appropriate time is given
to discuss a summary highlighting arguments made, roles
of respondents, frequency with which point was raised
and whether TF has taken up the input recommended and
why
• Feedback on MG members input [R10]
– IFAC should put in place arrangements for Boards to
provide direct feedback to individual MG group
members regarding their input to Board if it does not
appear that the Board will take the input in the manner
the MG member recommended
Preliminary Conclusions
• Finalization of standards [R11]
– IFAC should implement refinements to the manner in
which a standard comes together – e.g. by using
feedback statements – so there is a better opportunity for
constituents to anticipate what the content will, and then
does, encompass
• Voting by members [R12]
– IFAC should remove the provision for proxy voting by
Board members
Preliminary Conclusions
• Finalization of standards [R11]
– IFAC should implement refinements to the manner in
which a standard comes together – e.g. by using
feedback statements – so there is a better opportunity for
constituents to anticipate what the content will, and then
does, encompass
• Voting by members [R12]
– IFAC should remove the provision for proxy voting by
Boards
Preliminary Conclusions
• Role of PIOB members [R13]
– MG will consult with the PIOB and speak to IFAC to
discern how to most effectively draw upon and focus the
talents of PIOB members in carrying out PIOB’s
oversight work
• Role of PIOB staff members [R14]
– MG will consult with the PIOB regarding how best to
orient efforts of PIOB staff to technical issue resolution
in performing oversight fieldwork, with an emphasis on
starting their work early in a project’s life cycle, consider
comment letters, take decisions, and provide feedback
Preliminary Conclusions
• Diversity among PIOB members [R15]
– MG will take a broader approach to identifying and
appointing the next set of PIOB members
•
Consider factors related to geographical background, staggering of membership
terms and other aspects of diversity
• Funding of PIOB [R16]
– MG will, in consultation with PIOB and IFAC,
determine what longer term neutral funding
arrangements can be put in place for the PIOB
Preliminary Conclusions
• Longer term operation of MG [R17 &18]
– MG will look to enhance efficiency and effectiveness of
its interactions with the PIOB
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•
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Governance of PIOB Foundation,
PIOB’s oversight work
MG review of PIOB oversight cost
– MG will meet with PIOB at least once a year to discuss
market and regulatory developments, challenges,
opportunities for improvement
– Immediately following completion of effectiveness
review, MG will further assess its role and approach to
monitoring in light of its members’ experiences and
specific capital market developments since Reforms
adopted
Discussion