Regulation goes global again

Regulation goes global again

The globalisation of regulation went a step further last week with the decision of independent audit regulatory bodies in 18 countries to form an international regulator

The new super watchdog, called the International Forum of Independent Audit
Regulators (IFIAR), was set up as a result of a roundtable, hosted in Paris by
the French audit regulatory body Haut Conseil du Commissariat aux Comptes (H3C).

The discussion group is one more addition to the galaxy of watchdogs that
survey the accounting world at the moment.

There is, of course, nothing implicitly bad about global regulation.
Companies are global, so effective oversight presumably demands global
oversight.

Mike Rake, the international chairman of KPMG, has often made a point of
inviting precisely that kind of regulation, so the profession itself can hardly
complain about ‘regulatory creep’.

FRC chairman Sir Christopher Hogg noted the international nature of
accounting at the IFIAR launch.

‘Given the international character of both corporate reporting and the audit
industry, the creation of IFIAR will contribute to the FRC’s ability to fulfil
its own responsibilities in the UK,’ Hogg said.

But one key problem apparent to all is that the new forum lacks US
involvement.

The Public Company Accounting Oversight Board (PCAOB), which scrutinises UK
auditors for work they do on US-listed companies, is to be an observer only.
Such lowly status challenges the PCAOB’s authority to represent the most
important practices in overseeing the audit world.

Countries represented in IFIAR include Australia, Austria, Brazil, Canada,
Denmark, France, Germany, Ireland, Italy, Japan, Mexico, the Netherlands,
Norway, Singapore, South Africa, Spain and Sweden.

A fully globalised regulator may well look a long way off. But the
traditional barriers to such a move have eroded a little further.

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