Today, Auditing Practices Board technical director Jon Grant confirmed that the SEC’s concerns about the quality of financial reporting, which is being spearheaded by chairman Arthur Levitt, will have international ramifications because of the US’ membership of IOSCO.
IOSCO is the international securities body which is currently preoccopied with the appropriateness of international accounting standards.
But it could soon be faced with the added burden of examining the value of audits following the findings of another SEC initiative which will throw the entire audit methodology under the spotlight.
The Panel on Audit Effectiveness, due to report around April this year, was created in response to a growing concern that the accounting profession should critically examine issues that may have led to a deterioration in the effectiveness of audits.
And the focus on audit quality had also been taken up by the APB, which is due to publish an exposure draft of a revised SAS 240 at the end of this month on quality control – a paper that will touch on audit independence.
At the same time, European Commission head of financial information and company law has pledged to publish a recommendation on audit quality assurance by the end of the month.
Grant said: ‘The SEC has concerns regarding the quality of financial reporting and has set up a number of committees ot address this. Concerns about audit independence are one aspect of the wider issues and the results of its review could well impact on international standards in due course.’
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