Monitoring Group proposes reforms to global audit standard setting

The Monitoring Group, consisting of public authorities responsible for monitoring the international audit standard-setting process, has issued a consultation paper setting out options to enhance the independence, relevance and transparency of international audit standard setting in the public interest.

The Basel Committee on Banking Supervision welcomes the Monitoring Group's consultation paper, Strengthening the Governance and Oversight of the International Audit-related Standard-setting Boards in the Public Interest, and views it as an important step towards improving audit standard setting.

The international audit standard-setting structure currently exists as a three-tier framework, consisting of:

(a) Standard Setting Boards ("SSBs") nominated and largely funded by the International Federation of Accountants ("IFAC"), the global organisation for the accountancy profession;

(b) An independent oversight body ensuring that the standards are set in a transparent manner that reflects the public interest (Public Interest Oversight Board, "PIOB"); and

(c) A body of public authorities working in the public interest and responsible for the overall monitoring of the standard-setting process (Monitoring Group). The Monitoring Group consists of the Basel Committee on Banking Supervision, European Commission, Financial Stability Board, International Association of Insurance Supervisors, International Forum of Independent Audit Regulators, International Organization of Securities Commissions, and the World Bank.

The Monitoring Group is committed to periodically reviewing the effectiveness of audit standard setting. The consultation paper is the product of the Monitoring Group's latest review, which began in 2016, and sets out options and recommendations to further enhance the governance and oversight of audit standard setting. The consultation paper focuses on the governance and structure of the SSBs that support auditing as a public interest activity, namely the International Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants. The proposal is far-reaching, setting out the main areas of concern regarding the current structure and considering, among other matters, the number, remit and size of the SSBs and their staffs; the accountability of the SSBs to IFAC; the process for nominating members to the SSBs; the roles of the PIOB and the Monitoring Group; and the means by which the structure is funded.

Readers are strongly encouraged to respond by Friday 9 February 2018 to the Monitoring Group consultation paper. Comments can be submitted via email to the following address: MG2017consultation@iosco.org.

About the Basel Committee on Banking Supervision

The BCBS is the primary global standard setter for the prudential regulation of banks and provides a forum for cooperation on banking supervisory matters. Its mandate is to strengthen the regulation, supervision and practices of banks worldwide with the purpose of enhancing financial stability. BCBS members include organisations with direct banking supervisory authority and central banks.

For detailed information on the Committee's mandate, structure, and work programme, visit www.bis.org/bcbs.