A global alliance of accounting organisations has found that firms that offer both audit and non-audit services are best positioned to deliver robust and reliable assurance.

The report published today by Chartered Accountants Australia and New Zealand (CA ANZ), the Association of Chartered Certified Accountants (ACCA) and the International Federation of Accountants (IFAC) provides compelling evidence that “the presence of multidisciplinary firms in a large and evolving corporate reporting system fills a valuable market need” and simultaneously commends how the rules that have evolved over the past two decades “mitigate risks associated with audit firms providing non-audit services to some audit clients.”

The report, Audit Quality in a Multidisciplinary Firm, draws its findings from leading academic literature, views of policy experts, and an in-depth study of how regulators worldwide manage risk. It is meant to contribute constructively to the international debate on the multidisciplinary firm business model and auditors providing non-audit services.

The report notes that high quality audits require “a diverse skill base” and that “the multidisciplinary model is one of the best mechanisms to develop the skills, expertise and consistency needed for quality audits.”

The narrower issue of providing non-audit services to audit clients is more nuanced. The report notes, “There continues to be concern that independence is compromised in doing so, in spite of strict rules that prohibit or restrict firms from providing such services to audit clients.

“Services that are permitted quite often are complementary to the audit, and threats to independence can be effectively mitigated. However, demonstrating to the public that perceived conflicts of interest are being appropriately managed is challenging.”

The report continues: “As this issue continues to be considered, it is important to remember that evidence cited in this paper calls into question the need for sweeping regulatory changes that could have unintended consequences on audit quality” and notes that “the vast majority of non-audit fees actually come from clients for whom firms do not provide audit services.”

Maggie McGhee, executive director - governance at ACCA, said:

“We welcome a robust debate on these issues that no doubt will continue to be important for the profession and policy makers, and encourage a conversation grounded on the facts.

“ACCA is delighted to publish this report with our colleagues from CA ANZ and IFAC. It is the latest example of the benefits which our alliance creates for our members and our students, as well as for the accountancy profession and the public interest.”

Amir Ghandar, CA ANZ Reporting & Assurance Leader, said:

“The multidisciplinary base of auditing firms is a strength that contributes to audit quality, but firms and the profession at large must continue to actively establish and demonstrate a culture of integrity through governance, transparency, and our core ethics.

“Robust independence rules have evolved over the past two decades to mitigate real or perceived risks of conflict of interest associated with audit firms providing non-audit services, and these should continue to evolve in order to keep pace with public expectations and emerging challenges.”

Kevin Dancey, IFAC CEO, said:

“Questions about audit quality, independence, and competition are always worth asking. But no one should rush to conclusions. The business case for the multidisciplinary model is strong and there is significant evidence in support of the model.

Let’s work with the facts as we continue to best serve the public interest.”

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 For media enquiries, contact:

CA ANZ: priya.kumar@charteredaccountantsanz.com
ACCA: alex.murphy@accaglobal.com
IFAC: geenaderose@ifac.org

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of more than 175 members and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce. 

About CA ANZ
Chartered Accountants Australia and New Zealand (CA ANZ) is a professional body comprised of over 120,000 diverse, talented and financially astute members who utilise their skills every day to make a difference for businesses the world over.

Members are known for their professional integrity, principled judgment, financial discipline and a forward-looking approach to business which contributes to the prosperity of our nations.

We focus on the education and lifelong learning of our members, and engage in advocacy and thought leadership in areas of public interest that impact the economy and domestic and international markets.

About ACCA
ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants, offering business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.

ACCA supports its 219,000 members and 527,000 students (including affiliates) in 179 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 110 offices and centres and 7,571 Approved Employers worldwide, and 328 approved learning providers who provide high standards of learning and development.

Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.

ACCA has introduced major innovations to its flagship qualification to ensure its members and future members continue to be the most valued, up to date and sought-after accountancy professionals globally.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. More information is here: www.accaglobal.com

We speak out as the voice of the global accountancy profession.

Many important voices advocate for the role of accountancy in society. As the global voice of the profession, we speak out in the public interest on behalf of the global accounting profession.

We release policy position papers and host articles by expert staff and contributors. Our policy team leads research and analysis on the most pressing issues facing the profession and its intersection with broader trends in business and society.

We contribute to and promote the development, adoption, and implementation of high-quality international standards. 

Transparent, high-quality international standards used by professional accountants are an essential pillar of the global financial architecture.

This International Public Sector Accounting Standards Board (IPSASB) Social Benefits page is your source for tools and resources to promote awareness, understanding and effective implementation of the new Social Benefits standard, IPSAS 42.

To help our stakeholders understand the IESBA’s recent proposed Code of Ethics changes to promote role and mindset expectation, the IESBA hosted a webinar detailing these changes.

Listen to IESBA Deputy Chair Richard Fleck share an overview of the proposed revisions, including:

• Highlighting professional accountants’ wide-ranging role in society and the relationship between compliance with the Code and the responsibility to act in the public interest;
• Enhancing the robustness of the fundamental principles of integrity, objectivity and professional behavior;
• Requiring an inquiring mind when applying the conceptual framework; and
• Highlighting the importance of being aware of bias and having the right organizational culture.

Comments to the Exposure Draft, Proposed Revisions to Promote the Role and Mindset Expected of Professional Accountants, are requested by October 31, 2019. For more information, please visit the Role and Expectations web page.

To help our stakeholders understand the IESBA’s recent proposed Code of Ethics changes to promote role and mindset expectation, the IESBA hosted a webinar detailing these changes.

Listen to IESBA Deputy Chair Richard Fleck share an overview of the proposed revisions, including:

IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations.

Information contained within the descriptions of Legal and Regulatory Environment, Adoption of International Standards, and Status of Fulfillment by SMO is based on SMO Action Plans provided to IFAC by the IFAC member organizations to which the information relates and on additional publicly available information.

Our work in the public interest requires us to maintain a reputation for clear values and behaviors around our actions and working relationships. Therefore, all staff, consultants and volunteers commit to abide by the IFAC Code of Conduct. The Code of Conduct has three main parts:

Dear Stakeholders:

On behalf of the IAASB, we are pleased to share our public report, Foundation for the Future, summarizing the Board’s achievements from January 1, 2016 to June 30, 2019.

This period, chaired by Professor Arnold Schilder, was one of great productivity for our Board and staff. Five new and revised standards were approved. Six exposure drafts were issued and we consulted with stakeholders on five key areas. The IAASB also published nine project proposals, project updates and feedback statements. To help our stakeholders better understand and implement our standards, the IAASB developed 31 implementation and support resources.

In line with the 2015-2019 strategy, the IAASB’s activities have focused on enhancing audit quality and addressing engagements other than audits of financial statements. The IAASB has also increasingly focused on what more can be done to better understand and address the challenges some users face in applying the International Standards on Auditing in audits of less complex entities.

In addition, the IAASB has remained true to our commitment to a rigorous program of international outreach (IAASB members and staff engaging with stakeholders by way of personal visits and meetings, participation in conferences, discussion groups and forums, as well as webinars and other methods of communication to inform and engage on technical topics). From 2016 to 2019, almost 400 outreach activities across 44 countries were conducted with key stakeholder groups. By working with our stakeholders and strengthening our relationships, we are better able to understand issues affecting our standards and promote their adoption and implementation.

As we enter a new phase for the IAASB, we are proud of the broad reach of our standards and recognize the significant responsibilities that come with this. During the period covered by this report, the number of jurisdictions worldwide that use or are committed to using the International Standards on Auditing increased from 111 to 130.

We are now completing the development of a new strategy and work plan in the knowledge that there is a strong foundation in place. At the same time, we accept the need to identify and respond to emerging challenges to ensure that we continue to deliver international standards that are relevant, robust and operable.

 
Yours sincerely,


Tom Seidenstein                                               Willie Botha
Chair (Effective July 2019)                                 Technical Director