Comment - IFAC raises the global standard

It is a sure sign of the growing significance of the International Federation of Accountants’ international auditing practices committee when more and more people – including the chairman of the Auditing Practices Board, Ian Plaistowe – are commenting on the committee’s structure and workplan. At IFAC, we welcome this debate.

However, I would like to call for greater effort at national level. Since the committee released a codified set of international standards on auditing (ISAs) in 1994, we have seen a surge in their adoption and use. Over 60 countries have implemented the ISAs. Some have made minor modifications, others have adopted them, with additional national requirements at the end.

And while there may be valid reasons for not completely adopting one or more of the ISAs, I would call on every country, including Britain, to review its efforts to move toward complete adoption.

There is no doubt that if the ISAs are to become global standards, IFAC’s international auditing practices committee must do all it can to maintain their quality and improve their credibility.

The committee already holds regular meetings with a board of advisers drawn from key international or regional regulators and users to ensure that standards are appropriate and respond to public expectations. And it follows a rigorous due process to ensure that those standards can be implemented around the world.

But there remains room for improvement. IFAC has recently allocated additional resources to recruit a new technical director and extra technical staff. We will also be reviewing the committee’s make-up, which may result in the introduction of more

preparers and users.

In terms of implementation, IFAC will be monitoring the extent to which national bodies adopt ISAs, and enforce compliance. We expect to begin this process this year.

IFAC must also continue to develop its existing code of ethics to ensure that it leads international thinking and is in advance of pressures from regulators, capital markets and others – particularly on the question of auditor independence. IFAC’s ethics committee is working with other bodies, for example the European accounting body FEE and the American Independence Standards Board, to ensure consistent, appropriate and high-quality standards are set.

If these standards are to be accepted globally, more countries must sign up to them, and more auditors seen to be using them – either by direct references in the audit report, or at least by a reference in the national standards to the fact that national compliance ensures compliance with international standards.

Frank Harding is president of the International Federation of Accountants.